GBP/USD – 4H.
As seen on the 4-hour chart, the GBP/USD pair performed a reversal in favor of the British pound and returned to the correction level of 50.0% (1.2668). The new rebound of the pair from this Fibo level will again allow traders to count on a reversal in favor of the US currency and some fall in the direction of the correction level of 38.2% (1.2501). Fixing the quotes above the Fibo level of 50.0% will increase the chances of the pair to continue growing towards the next correction level of 61.8% (1.2836). Today, the divergence is not observed in any indicator.
The British pound returned to growth calmly and naturally, as if it had not crashed down with frightening regularity for several years. If at first, it was still possible to find the causes of the growth of English currency, as did the seemingly official information about the good results of the negotiations between the Prime Ministers of Great Britain and Ireland, then why the pound is expensive now, it is very difficult to say. According to unverified information, some deputies from both the Labor Party and the Conservative Party are ready to change their attitude to the deal with the European Union. According to the same information, if the text of the agreement takes into account the views and wishes of all parties, the number of votes approving the agreement with the European Union will increase. It is on this information that the pound has been growing for several days.
Now let's try to figure out what this information is worth. Firstly, her status as an absolute rumor, nothing confirmed. Secondly, no exact figures and reasons are called. Why, suddenly, 4 days before the EU summit, at which everything will be decided, some deputies began to support a deal with the EU? And how many of these deputies? What is the balance of the pros and cons now? All of this remains unknown. Also, there is other unconfirmed information that EU politicians have already decided not to approve the terms of the agreement simply because there is not enough time to discuss all aspects. Thus, we believe that the current euphoria of the bulls in 2-3 days will be replaced by their complete withdrawal from the market, as no real facts are indicating an increase in the likelihood of an agreement at the EU summit.
Moreover, I draw attention to the fact that one of the goals of Boris Johnson is a re-election. It is expected that he will again propose to parliament to vote for a snap election if Brexit still has to be postponed to January 2020 and expects to strengthen the strength of the conservatives in parliament. However, Johnson's plan may fail, as several of his ideas have failed before. Many voters, politicians, analysts and experts understand that, first of all, the name of Johnson is now associated with Brexit "No Deal". And his desire to hold an early election is to get the necessary majority of votes to implement any Brexit without hindrance. Thus, only those who fully support Brexit "No Deal" will vote for conservatives. And there aren't many. Hardly more than 30%.
What to expect from the pound/dollar currency pair today?
The pound/dollar pair can perform another rebound from the correction level of 50.0% (1.2668). Thus, I expect today to fall to the level of 1.2501. Closing above the Fibo level of 50.0% and growth will continue. The report on changes in average wages has already shown a weaker than expected value, and the unemployment rate in the UK rose in August to 3.9%. However, all this did not stop the growth of the pound.
The Fibo grid is based on the extremes of March 13, 2019, and September 3, 2019.
Forecast for GBP/USD and trading recommendations:
I recommend buying the pair with a target of 1.2836 if the consolidation is performed above the Fibo level of 50.0% with the stop-loss order below the level of 1.2668.
I recommend considering the pair's sales with the target of 1.2501 today if another rebound from the level of 50.0% is performed.