4-hour timeframe
Amplitude of the last 5 days (high-low): 147p - 81p - 49p - 107p - 93p.
Average volatility over the past 5 days: 95p (high).
Unlike the European currency, the pound reacted correctly and on time to the weak inflation report in the United States. But it completely ignored two failed reports from the UK, on GDP and industrial production. According to the Office of National Statistics, GDP in August fell by 0.1% MoM, while industrial production lost 0.6% in monthly terms and 1.8% in annual terms. But, according to the NIESR Institute, over the past three months, including September, GDP has grown by 0.5%, which is significantly higher than forecasts. However, this report was also not taken into account by market participants. By the way, Mark Carney, the head of the Bank of England, also drew more attention to the negative figures of today's statistics from the UK. He said Thursday reports show that the economy was slightly weaker than "we expected." At the opening of a new 20-pound banknote of Great Britain, the head of the British regulator also said that the central bank expects a 0.2% increase in GDP in the third quarter. If not for the weak report on inflation in the US, the pound would most likely continue to fall today.
The key theme for the British currency, "Brexit," today did not please or upset traders. No new information has been received, so we can only wait. Wait for the EU summit on October 17-18. To wait for Boris Johnson to ask for deferment at this summit. Wait for further action by the UK Parliament. Once again, we draw the attention of traders that almost any information that brings Britain closer to the hard Brexit will almost certainly cause a new drop in the pound.
Meanwhile, some European political scientists believe that the European Union is making a mistake by not agreeing to a proposal by Boris Johnson on the border on the island of Ireland. According to European experts, the double border on the island is a reasonable proposal and, at least, a starting point for further negotiations. There are simply no other options for avoiding the conflict between Ireland and Northern Ireland, while the first country will remain in the EU and the second will leave the bloc. But if Brussels rejects this offer now, then there is a high probability that early parliamentary elections will nevertheless be held in Great Britain. Even if this happens after Brexit is postponed for three months. But here, according to many experts, the Conservative Party will win, Johnson will get the majority he needs in Parliament and will implement the hard Brexit on January 31 completely unhindered. The position of the European Union is short-sighted, according to experts. The EU is ready to constantly postpone Brexit, instead of giving in and ultimately letting go of Britain with a peace agreement, which will also be beneficial to the European Union itself.
From a technical point of view, the pound/dollar has adjusted to the critical Kijun-sen line, above which it has not yet been able to gain a foothold. Thus, a price rebound from this line can trigger a resumption of a downward trend. Overcoming the Kijun-sen line can give confidence to the bulls, but we do not recommend buying the pair below 1.2362, as there are too many resistances on the GBP/USD path now.
Trading recommendations:
The GBP/USD currency pair has begun a new round of correctional movement. Thus, we recommend that you wait for its completion and again sell the pound with targets at 1.2167 and 1.2109 if the bears manage to keep the pair below the critical line. The fundamental background remains on the side of the US currency, so the pound sterling should be wary now.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustration:
Ichimoku indicator:
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.
MACD indicator:
Red line and bar graph with white bars in the indicator window.