Weekly Forex analytics. Pound “is not afraid of negative”
The British pound sterling eventually developed a special “immunity” to ambiguous and frankly bad news. If for the first time the market reacted by selling “Briton” to any information about Brexit, now investors have learned to analyze the news and highlight important.
In the first decade of September, the British Parliament began a discussion of the bill on the withdrawal of Britain from the European Union. This is the first such hearing on this matter, and it will be very interesting to see what they will end. The curator of the UK exit procedure from the EU, Mr. Davis, will enable all parties to the discussion to express their views.
This is mainly about legislative nuances. Europe does not yet have the practice of holding such events and therefore studies literally “on the go.” Everyone knows that London poses one of the key tasks for Brexit, not only the autonomy of political and economic processes, but also control over its own laws. Apparently, most of the debate will concern this sphere: Britain does not abandon the all-European code, but wants to build a more perfect legislative model. To do this, we need at least a unanimous decision on this issue.
In the negotiations between Britain and the EU on Brexit in recent weeks there has been no progress – in part because of the August vacation of politicians, in part because of the lack of a clear idea of what to do next. The latest published statistics show that the growth rate of the economic system is indeed weakening. Directly with Brexit it is not connected – it has not even begun yet. Perhaps the business is taking preventive steps, reducing the share of visible risks, or whether external factors have an influence. Be that as it may, the real estate sector demonstrates a “drawdown”, the services sector in August looked weaker than in any of the comparable periods. The European recession in consumer activity “reached out” to the Foggy Albion, which could affect GDP data. However, the pound is becoming more expensive and is not going to stop there.
If we consider the chart of the dynamics of the GBPUSD currency pair from the point of view of technical analysis, we can conclude that the position of the British currency is more confident with respect to the position of the US dollar. Since March of the current year GBPUSD pair is in the uptrend corridor, when the price moves permanently from the support line to the resistance line and back. The dynamics of recent weeks is trying to continue the development of the situation in the same “channel”. But if you look at the picture of the GBPUSD pair from the position of Elliott Wave Theory, you can see that, perhaps, the pair is not in the ascending corridor, but in the “bear” phase of the medium-term life cycle. And the current upward movement can be explained by an internal “bullish” correction. But if we combine these approaches when considering the general picture, we can assume that the current line of support for the rising corridor is a fairly powerful area of interest for buyers. Overcoming this zone with a downward breakdown can open the way to at least 1,2588 mark. But while the market does not even try to test the area of interest of buyers, but on the contrary – it seeks new heights.
In the short term, the GBPUSD pair can “test for strength” the upper limit of the local uplink. One of the most likely scenarios for further development can be considered a decrease to the lower border of the corridor – around 1.2970. But the option of going up, beyond the current corridor, too, can not be “discounted.” This option simply indicates the desire of the market to go to new highs of medium and long-term scales.