FX.co ★ GBP/USD. Forcast for March 21, 2013

Yesterday UK Chancellor of the Exchequer George Osborne delivered his annual budget. Investors considered it was optimistic. Mr Osborne assured that cuts in spending would be lowered in order not to influence the economy amid Europe’s weaknesses. Inflation target level was preserved at 2%. Expected growth in gross domestic product is just 0.6%, down from the previous forecast of 1.2% and 1.8% for 2014, down from 2%. The Chancellor responded to new forecast for the Office for Budget Responsibility showing the UK barely escaping from a triple-dip recession by announcing a series of growth measures; a 3 billion a year pounds boost to infrastructure spending, a cut in corporation tax to 20% in 2015, and a 2,000 a year pounds cut in national insurance contributions to business.

Today at 13:30 GMT+4 data on UK Retail Sales in February is revealed. It is expected to be 0.5% vs. -0.6% in January. Public Sector Net Borrowing is forecast to be 8.4 billion pounds against -9.9 billion in January. The index of factory orders (CBI) in March is issued at 15:00 GMT+4. It is expected to be -16 vs. -14 in the previous month. The pound may be underpinned by US Philadelphia Fed Index and US Existing Home Sales in February (5.02 million vs. 4.92 million).

Technically, after the level of Fibonacci 200% on the H4 (higher than 1.5136) is reached, the first target 1.5198 opens, it is the high of March 5. Then the area of the Fibonacci levels on the H4 261.8% - 271% (1.5230-1.5244), the third target is resistance of Fibonacci extension: 1.5289 – 1.5310.