The British economy is back to stagnation. In Q4 2012, the national GDP declined by 0.3%. The dynamics definitely disappointed economists who had anticipated a minor decline (0.1%).
TD Securities is concerned about the Bank of Japan’s possible reaction to the stats. According to Jackie Douglas, a strategist in TD Securities, there is high probability that the Bank of England will keep stimulating the national economy. However, the final decision that will be made during February’s meeting will depend mostly on business activity stats (Manufacturing and Services PMI reports).
TD Securities experts assume that the current readings, which are close to the average, will keep the BoE from initiating another round of QE. Therefore, the central bank will focus on other ways of stimulating the national economy. If the PMI reports prove negative, the Bank of England may well expand the bond purchase program by £25bn.
Forex.
According to , the British Pound keeps weakening against the US Dollar. The experts report that GBPUSD is forming a big-scale downswing represented by wave А/В of level Weekly2.
The closest levels of support for a further bearish move are located at 1.5644, 1.5520/11. The current downswing will be completed as soon as the price overcomes the top of the MF sloping channel and consolidates above 1.5826 (as shown below).
