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Business / Finance

The pound goes down

RSS feed for Forex Review 14.01.2020 at 08:18 New

Daily analytical reviews of the Forex market

The Beginning of the week was to pound the time of testing. The British currency again slipped down, showing a downward trend. Experts believe that such as sterling will last until the end of this month.

According to experts, the dynamics of "British" has a strong pressure, the situation around Brexit. The protracted process of a British exit from the EU is extremely negative impact on the British economy, experts stress. According to Mark Carney, Governor of the Bank of England as soon as possible the adoption of incentives in the preservation of the weakness of the national economy. Recall that the controller is ready to reduce the key rate if necessary, and it seems that the situation demands it.

According to some economists, due to problems with the country's withdrawal from the EU the UK economy continues to lose money, and it may continue throughout the year. According to preliminary estimates, Brexit is very costly for the United Kingdom: from 2016, the cost has reached nearly £130 billion In the current year the amount of money injected may exceed £70 billion, analysts warn.

the Current situation is extremely negative impact on the pound and on the dynamics of the pair GBP/USD. The downward acceleration of tandem has given not only the uncertainty surrounding Brexit, but disappointing macroeconomic statistics for British industry, and dovish rhetoric from the Bank of England. According to representatives of the regulator, the country's economy needs new stimulus, the rate can be reduced, and the program of quantitative easing (QE), on the contrary, increased. However, even in this case, the existing tools of monetary policy may not be enough to stabilize the situation, noted in the Bank of England.

a Painful impression on traders and investors produces and the current state of the British economy. Weak macroeconomic reports on industry, UK steel, of a confirmation of problems. According to current data, in November 2019, industrial production in the United Kingdom fell to 1.2%, while the manufacturing industry – by 1.7%. According to preliminary estimates, in November 2019, production in the manufacturing industry will decline by 1.6% yoy. According to analysts, the rate of decline of industrial production may accelerate from -1,3% to -1.4%. In the case of confirmation of these predictions turns out that industrial production of the United Kingdom is reduced for the eighth month in a row. This is a very traumatic factor for sterling, say the economists.

the Key indicator of the UK economy – GDP – is also poor. According to the latest data, growth for a long period of time remained at zero. Previously, the catalyst for the decline in the GBP/USD has been a reduction in GDP of 0.1%. According to analysts, in 2020 the British economy will continue to decline, the prospects for the pound, too, remain vague. Experts have fixed the resumption of the downward flow of GBP/USD. Slide the tandem began last Friday, January 10, although at the time sterling was trying to fight for higher levels, rising up to 1,3085.

However, Monday, January 13, brought GBP/USD plenty of disappointments. Yesterday, the tandem fell to disappointing levels 1,2966–1,2967, from time to time trying to go beyond the low range. However, most efforts have not led to success.

the Morning of Tuesday, January 14, GBP/USD is once again met with a decrease. Tandem dipped to marks 1,2970–1,2971 and continues to operate in this range. GBP/USD is showing a clear desire to find the bottom.

currently, sterling does not justify expectations of experts who predicted that by the end of January 2020 it will cost $1.3200 levels, and by the end of the year – at least $1,3500. However, many experts expect to clarify the situation surrounding Brexit, as well as for normalization of the situation by reducing interest rates and growth in external demand, the weakening of trade between the USA and China. According to Silvana, Tenreiro, representative of the monetary policy Committee of the UK, in the event of a slowdown in economic growth in the near future the regulator will have to ease monetary policy. Experts believe that the dovish rhetoric M. Kearney and S. Tenreyro very dangerous for sterling, which position and so cranky.

According to analysts, for the pound in the short term there are no preconditions for the upward trend. He's pushed as a lack of clarity about Brexit and the weak macroeconomic data for the British industry. However, many experts believe sterling and the currency of the current month, assuming that after pricing the "swing" sooner or later it will come into balance.

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