So except those four methods described in the previous article there is also another method of forex market forecast that I think it would be interesting for you to find out. So just keep reading the second part of these series of articles about forex forecasts and find out what else you can use to improve your trading and forecast the possible market changes and movement toward world currencies and forex market fluctuations. So in my opinion it would be for you very useful to read this very article. So let us begin now.

There is one more method, offered by Dried Vadhvani, the official representative of committee on monetarist policies of Bank of England. This committee determines interest rates in England.

Its method is based on so-called model of the intermediate period which, as a matter of fact, combines approaches UIP (poor percentage index) and FEER (fundamental-balanced currency exchange rate). According to this approach, changes of exchange rates reflect a difference in interest rates plus the certain insurance on risk. Last is influenced, in turn, by variables which are used by supporters UIP and FEER methods.

Method ITMEER works pretty well and in a greater degree explains rate fluctuations of currencies though its settlement formulas of ratios between currencies are sufficient “are fragile” from the statistical point of view. According to this method, all exchange rates aspire to the balanced level. The variable of a difference of interest rates here plays less crucial role, than in UIP (poor percentage index), also as well as the current balance sheet in FEER. The Special attention here is given to a level of unemployment. As it is not strange, supporters of method FEER don’t consider it in the calculations. Growth of a level of unemployment reduces an exchange rate. Acting directly, instead of indirectly, it influences interest rates.

Anyway, but all it has much bigger value, than it would be desirable. So, at the moment, it agrees PCC (parity of consumer capability) and FEER, the sterling rate is considerably overestimated concerning euro. UIP also predicts pound sterling falling because the British interest rates above the European. However, it agrees ITMEER, the pound sterling, probably, remains at former level, as now. Its growth in relation to DM has been caused only by increase in a level of unemployment in Germany. It, in turn, has weakened DM as it is meant that the substantive provision of the current account of Germany has worsened. The similar situation evidently disturbs to internal investments.

Presumable conclusion: the pound sterling remains strong.

Let’s remind that none of these models can be used purely mechanically. There is a set of other factors influencing system and to predict all of them it is not obviously possible even theoretically.

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