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GBP/USD: to reduce the necessary break of support levels 1.4420, 1.4390 _09/05/2016

Technical analysis and trading recommendations - https://fxpcm.com/en/fx/gbpusd-reduce-necessary-break-support-levels-14420-14390-09052016

Thursday 11:00 (GMT) is scheduled publication of the Bank of England decision on interest rates in the UK. It is expected that the interest rate will remain unchanged at 0.5%. However, the tone of comments on the decision will depend on the dynamics of the pound on the foreign exchange market.

The UK economy is in decline. Thus, according to economists' expectations, industrial production fell in March by 0.4% in annual terms. Production in the manufacturing sector fell by 1.9% in March (yoy). UK consumer confidence index in April fell to a negative value (-3), the lowest since the end of 2014.

As previously announced in April, Bank of England Governor Mark Carney, if the UK population will vote for the country's withdrawal from the EU, the pound may lose 20% of its value. Uncertainty in connection with the referendum on the UK's membership of the EU, as well as other weak macroeconomic indicators (in particular, weak GDP growth in the last two quarters of last year, + 0.5% and + 1.9% for the year, and growth of 0.4 % in the 1st quarter compared to the last quarter of last year) would not allow the Bank of England planned tightening of monetary policy in the coming months.

In its latest quarterly report, the inflation the Bank of England lowered its growth forecast for the UK economy in the years 2016 and 2017 (to 2.2% and 2.4%, respectively).

Expect the first interest rate increase in the country, and thus stable growth value of the pound, it is possible not earlier than mid-2017, provided that inflation at that time exceeds the number of the target level of 2%.

Thus, the pair GBP / USD will remain under pressure in the medium term. Breakdown of support levels 1.4420, 1.4390, 1.4335 will increase the downward dynamics of the pair.

Monday, 09 May, 2016 / 12:28

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Source : http://fxpcm.com/en/fx/gbpusd-reduce-necessary-break-support-levels-14420-14390-09052016

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