Something went wrong yesterday when everything should be quiet and calm. This caused the pound and euro to grow quite actively. At the same time, the pound became the first to grow, so the reason for the violation of the established order lies in the UK, which was exactly the case. And the answer lies in just one single person – Boris Johnson. It should be recalled that at the end of the EU summit, British Prime Minister complained about the total unwillingness of Brussels to change its approach to negotiating a trade agreement and called for preparing for an unregulated Brexit, that is, without the trade agreement itself. So, yesterday, Mr. Johnson made a statement once again that crosses out all the previous ones. He announced that in order to reach a compromise on a trade agreement, London is ready to make a number of fundamental changes to the law on the protection of the UK internal market. The very law that caused London and Brussels to have a serious fight and almost disrupted the entire course of negotiations. So far, there is no specifics as to what kind of changes can be made to this most unfortunate law. Nevertheless, London's willingness to concede on this issue has led to the average optimism of the pound and euro. After all, the idea that an unregulated Brexit carries huge losses for the Euro zone has been actively discussed recently, but without serious justification and evidence.
However, the pound began to decline and lost about half of all its gains just a few hours later, while the euro remained at its own. The answer lies in the United Kingdom. There was a report from the media that a strange document was signed for a possible action plan of the UK government in the event that Scotland tries to hold a second referendum on independence. This means that after Brexit, London does not rule out such a possibility. And although officials have not yet commented on this rather strange document compiled by a certain consulting company, the rest remained which made investors clearly worried. It was also enough to make the pound slightly decline.
Yesterday's events left more questions than answers. So, investors will wait for answers to these very questions. For the news background, much will come from Britain, as US macroeconomic statistics are unlikely to make an impact on anything. Here, we are talking about construction, whose volume construction could rise by 2.8%. The number of building permits issued should also rise by 1.8%, which indicates a further growth potential in the volume of construction. However, all this does not have any significant influence on the pair.
Building Permits Issued (United States):
The GBP/USD pair showed high activity. As a result, the quote returned to the level of 1.3000, where there was a natural reduction in trading volumes, which resulted in a recovery move in the direction of the coordinate 1.2935. Now, there is a characteristic consolidation of 1.2935/1.2955, which is highly likely to end with another speculative activity surge, where breaking the established limits is considered to be the best trading method.
Following the pound, the EUR/USD pair showed an upward interest during yesterday's European session, where the quote returned within the range of 1.1765/1.1795 in the structure of the inertial movement. We can assume that the quote will temporarily concentrate on the values of 1.1765/1.1795, which will lead to a sideways move, from which the breakdown method can also be used.