While everyone is discussing the success of the UK's vaccination program, a renewed uproar in the trade relations between the UK and the European Union sparks.
The European Commission plans to launch legal action against the UK on Monday over the UK government's decision to unilaterally change parts of the Brexit deal relating to Northern Ireland.
The move marks a significant escalation of tensions between the two sides just three months after the UK officially left the single market and Customs Union.
Let me remind you that as part of the Brexit deal, Northern Ireland remained in the EU Customs Union and partially in the single market. This prevented the need for border checks on the island of Ireland, but imposed them on goods entering the province from the UK, causing delays and disruptions.
The European Commission has already warned that the UK's decision last month to scrap rules on the movement of food between the UK and Northern Ireland to ease the flow of goods has breached the Brexit withdrawal agreement. The UK government, in turn, said that it did not violate the law.
It is expected that EU officials will announce the trial today, and this, in turn, may lead to unrest on the part of investors and as a result, a decrease in the value of the sterling.
What happens on the trading chart?
After last Friday, market participants found a periodic pivot in the area of 1.3862. A rebound occurred with the price returning to the lower boundary of the psychological level 1.4000 (1.3950/1.4000/1.4050). After this process, the market went into a slowdown stage, forming a variable amplitude around 50 points. In fact, the market participants, as before, are under pressure from the area of the psychological level, which may have a positive effect on the volume of short positions.
In simple words, the corrective move from the high of the medium-term trend of 1.4224 is still relevant and there is a chance for the weakening of the pound sterling.
Taking into account the above information on the escalation of interests related to Brexit, it is possible that traders will continue to work to reduce the value of the sterling, given the factor that the overbought status has not yet been overcome in the market.
Expectations and prospects
The economic calendar for March 15 is empty, and the information noise is considered to be the only factor influencing speculators.
From a technical analysis point of view, it is necessary to observe the behavior of market participants relative to the current amplitude of 1.3895/1.3950, since this is only a platform for future acceleration.
It is worth considering that when working on a decline, the main volume of short positions will come after the breakdown of the local minimum of last Friday – 1.3862. In this case, a path will open in the direction of the current correction minimum at 1.3778.
What is happening in the market in terms of indicator analysis and market dynamics?
Analyzing different sectors of time frames, we see that technical instruments have a neutral signal due to the convergence of the price to the area of the psychological level, but still, taking into account the results obtained, the indicators are more inclined to sell than to buy.
In terms of market dynamics, a low indicator of 53 points is recorded, which is 54% below the average. Acceleration is still possible in the market, precisely due to information noise, which affects the speculative interest of market participants.
Key levels
Resistance zones: 1.4000 ***; 1.4350 **; 1.4550; 1.4700; 1.5000 ***.
Support Zones: 1.3750 **; 1.3650 **; 1.3300; 1.3000 ***
* Periodic level
** Range level
*** Psychological level