06, February 2013

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

British Institute NIESR lowered annual economic growth forecast for this year and against the November forecast at 1.1%, now expects 0.7%.

The Institute forecasts the growth by 1.5%. in 2014. Great Britain business activity index in the service in January rose from 48.9 to 51.5 vs. 49.8.

Still we believe that investors moved the focus from the expectations to real economic indicators.

There are some rumors that the future head of the Bank of England Governor Mark Carney is going to moderate the monetary policy. The profitobility on 10-year bonds rose on 2.02%, from 2.08% to 2.12%, the pound ended the day lower by 100 points.

Australian retail sales data showed a decline of 0.2% versus expectations of growth of 0.3%. These can add some pressure on the pound as well as on the euro, as investors expect to see the effect in the form of increased consumption of lower interest rates in the last year, but it never came.

We expect the pound to continue going down breaking through the level 1.5646 - support line of the channel crossing from 123.6% Fibonacci level of response to the four-hour chart.

The first target is 1.5620 - 138.2% Fibonacci level, the second target is 1.5577 - 161.8% Fibonacci level, where there is close support on the daily chart at the intersection of the trend lines - 1.5610.