TD Securities confidently sell pounds, as it is to reach 1.20 by the end of the year

The pound is substantially stable in the period after the referendum, but this is a temporary phenomenon, say the analysts from TD Securities. At the macroeconomic level risks continue to increase. Some political issues have been resolved more quickly than expected, but the uncertainty remains, they added.
Therefore the stability of sterling has its limits. In combination with careful, yet peaceful tone of the Bank of England, the tendency to fall in economic growth, the increase in inflation and pressure on the balance of payments, the pound has the potential to become even cheaper, say analysts.
They say they sell in any attempt of strengthening of the pound, they believe that its target is 1.2000 by the end of this year.

Forex forecast for GBP/USD for September 19 - 23

As expected, the behavior of the pair GBP/USD last week was determined by the large amount of news from the UK. At the same time the most of analysts with a graphical analysis on the D1 predicted for the pair bearish trend in an effort to stay within the boundaries of the summer side channel. What happened - as a result of a sharp fall, the pair even broke through the central channel of the line and reached a level of 1.3000.
 Assessing the prospects for the GBP/USD, most of the indicators and technical analysis on the D1 insist on continuation of falling of the pair to the lower limit of three-months side channel - 1.2850. As for the experts, their opinions were divided into three almost equal - 35% for the fall, 30% of growth and 35% of the lateral trend. The common in their predictions is only that the pair will continue to stay in the corridor in the range 1.2850 - 1.3450.

The Bank of England left interest rates unchanged at a level of 0.25%

The Bank of England left interest rates on the main level of 0.25 percent, but it became clear that there is a real opportunity for a new reduction in interest rates by year-end, which of course is related to the leaving of the United Kingdom from the European Union and all related consequences with this. The institution raised its forecast for growth of the economy in the third quarter to 0.3% compared to the previous forecast of 0.1 percent.
Immediately after the news GBP/USD fell to 1.3179, but later rebounded and closed at 1.3237, almost unchanged from closing on Thursday. Retail sales in the UK shrank in August, decreasing by 0.2%, although in July recorded a growth of 1.9%.

Business activity in the British manufacturing sector improved surprisingly sharply in August

Business activity in the British manufacturing sector improved surprisingly sharply in August to a 10-month high after a dramatic drop to 41-month low in July. The reason was that industrial companies in the country seemed to have recovered from the initial shock of the decision of Britain to leave the EU and managed to increase their export orders, and found support from the sharp depreciation of the British pound after news for Brexit, say analysts.
The industrial PMI index in UK grew strongly in August to 53.3 points from 48.3 points in July with expectations by financial markets for index level of 49.0 points. This is the highest level of the index for 10 months.
Index PMI, which measures industrial new export orders, rose from 51.4 points in July to 54.9 points in August, reaching the highest level since June 2014, while the index for industrial production rose to a 7 month high.
Now on focus is the research by agency Markit about the activity in the UK services sector in August, which will be announced early next week.

Westpac recommends selling of pounds around $1.32 to $1.28 and $1.25

Westpac strategists recommend selling GBP at 1.32. They note, that there is a risk a risk of profiting from short positions. However, they say, that the correction of the GBP will likely be short term as the Bank of England took a very flexible position. Regular auctions should emphasize the intention of the Bank of England to cut rates again, which will support the bearish pressure on GBP, analysts say.
The level of economic activity and the housing market in August, which will be published at the end of the month, will likely cause more interest, than the GDP data for the second quarter, as signs of deterioration of the data can trigger further action by the bank of England, say analysts.
The closure of short positions on GBP/USD should allow sales to 1.3200, with the initial target 1.2800, as the more distant target is the psychological 1.2500 level, analysts conclude.