FX.co ★ Trading strategy for GBP/USD on October 8th. Brexit "No Deal" will drive Britain into huge debts

GBP/USD – 4H.

As seen on the 4-hour chart, the GBP/USD pair returned to the correction level of 23.6% (1.2293). New graphic constructions and divergences are not observed now. A little later, the pair's quotes even performed a consolidation under the Fibo level of 23.6%, but it is as uncertain as to the consolidation in the period from October 1 to 3. The information background remains on the side of the US dollar, mainly due to the lack of any progress in the negotiations on Brexit, but at the same time, I recommend not to rush into the market with new sales of the pound/dollar pair, as recently bear traders clearly doubt the feasibility of new sales. If you sell the pound now, then in very small volumes.

While the Brexit process is stuck in one place, and Boris Johnson and EU officials continue to bargain, the Institute for Fiscal Research analytic center calculated what financial damage the UK will suffer if Boris Johnson implements Brexit "No Deal". There could simply be no positive news and calculations here, so I'll say right away that borrowing will increase to £100 billion. That is, the UK will increase debt, as the government will spend more than it receives from all its sources of income. In 2018/2019, the budget deficit was already 41 billion pounds, which is equivalent to 1.9% of GDP. And yet there was no Brexit, the country is still only on the way to it. What would be the impact on the UK economy if the country did leave the EU without an agreement? This is what many experts, Mark Carney, bankers, economists, businessmen, and analysts fear. That the country may not reach default but will be mired in a crisis for many years. That is why the deputies are fighting so hard to block Johnson's fix-idea to leave the EU until October 31 without an agreement.

Meanwhile, Boris Johnson is waiting for the European authorities to respond to his latest proposal on the terms of the agreement. Johnson once again suggested that Brussels abandon any hard border on the island of Ireland, and introduce a facilitated customs control regime to move customs control points away from the border between the States and to inspect crossing the border selectively. At the same time, Northern Ireland will be under the jurisdiction of Brussels for another 4 years, after which the government of this country will decide whether to return to the British customs zone or to extend the transition period. It is expected that these proposals will also be rejected by the European Union, which insists on the integrity of its borders and fears that the border with Northern Ireland, which will not be controlled, there will be a lot of problems for the Alliance.

What to expect from the pound/dollar currency pair today?

The pound/dollar pair returned to the correction level of 23.6% (1.2293). This morning, there was a speech that can make bears trade more actively. And in the evening, there will be a speech by Jerome Powell, which can be simply ignored. Thus, everything will depend today on what the heads of the central banks of the UK and the US will say. A confident close below the Fibo level of 23.6% will increase the probability of a further fall in the pair's quotes.

The Fibo grid is based on the extremes of March 13, 2019, and September 3, 2019.

Forecast for GBP/USD and trading recommendations:

I do not recommend buying a pair shortly, as the information background is now difficult to call positive for the pound.

I recommend considering new sales of the pair with the target of 1.2014 if a confident closing is performed below the level of 23.6%, with the stop-loss order above the level of 1.2308.