Source: Forex Analysis
Amplitude of the last 5 days (high-low): 63p – 52p – 81p – 60p – 44p.
Average volatility over the past 5 days: 60p (average).
The British pound paired with the US dollar started to come to life today in the afternoon. So far, the movement of the GBP/USD pair is still characterized as “semi-lateral” and low volatility, nevertheless, the US dollar rose by 60 points in just a few hours today at the US trading session. There are certain hopes that the period of uncertainty for the pair will end. From our point of view, the general fundamental background does not change at all. We still believe that the pound can only move in one direction now – down. In recent weeks, the bulls have been able to restrain the bearish outbursts for the pair’s new sales thanks to optimism regarding the victory of Conservatives in the Parliament elections. However, above the level of 1.3000, the bulls failed to consolidate their success, which means that there are a sufficient number of doubts among market participants about the unequivocal victory of the Conservatives.
There are several factors that make it doubtful that the election will end with the necessary Conservative victory.The first, probably the most important, is historical. In an attempt to consolidate their political influence, which would allow Brexit to be realized, Theresa May arranged for re-election to Parliament. However, then the Conservatives not only failed to increase their presence in Parliament, they only worsened it. Who said that now the election results will be radically opposite? Many experts and the electorate note the strength of Boris Johnson as a politician. Many support him as prime minister. However, this does not mean that the Conservative Party will collect 50% of the vote. The second factor is coalition. If in total the Conservatives will collect more seats in the Parliament, but the Labour Party will cooperate with other opposition forces, then Brexit will again be blocked. Then the question will be posed differently: with whom can Conservatives cooperate and how many votes will they have in Parliament in this case? From our point of view, all these calculations are fortune-telling on coffee grounds. You need to wait for the elections, wait for the results, then draw conclusions.
Meanwhile, the Labour party, feeling that the Conservatives were ahead of them in all ratings, unveiled a manifesto detailing the party’s program. Among the main promises of Corbyn – the construction of social housing, a new deal on Brexit, a referendum at which residents of the UK will be asked to choose between a deal and the cancellation of Brexit. The Labour leader also promises to make education at universities in the UK free. “This is a manifesto of hope. A manifesto that will bring real change,” Corbyn said. Also, the Labour leader once again pricked Johnson, saying that he was going to steal the British health care system and sell it to American companies. The Labour leader did not forget about the main supporters of the Conservatives – bankers and billionaires, saying that taxes for the rich will be raised, as well as the level of minimum wages in the country. All of these promises, according to Corbyn should help Labour collect more votes.
Well, the pound, despite a small uptick in activity today, generally remains in an incomprehensible movement. It was not possible to escape above the level of 1.3000 even from the third attempt, a new approach to the downward trend? From a fundamental point of view, this is a reasonable option for the development of events, given the failed reports from the UK last week, which were not worked out by market participants.
GBP/USD continues to adjust. Thus, traders are advised to wait until the situation is cleared up, since there is no possibility to trade for an increase due to the location of the price below the Kijun-sen line. Short positions are formally relevant now, but in small lots, since there is no dead cross at the moment, and quotes are located above the Ichimoku cloud.
Explanation of the illustration:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A – light brown dotted line.
Senkou Span B – light purple dashed line.
Chikou Span – green line.
Bollinger Bands Indicator:
3 yellow lines.
Red line and bar graph with white bars in the indicator window.
Support / Resistance Classic Levels:
Red and gray dotted lines with price symbols.
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movements:
Red and green arrows.
The material has been provided by InstaForex Company – www.instaforex.com