FX.co ★ GBP/USD. October 8. Results of the day. Donald Tusk's patience snapped. Merkel rejected Johnson's proposal for Brexit

4-hour timeframe

Amplitude of the last 5 days (high-low): 134p - 97p - 147p - 81p - 49p.

Average volatility over the past 5 days: 102p (high).

The attitude to Boris Johnson in the European Union is getting worse and worse. In fact, not only in the European Union. In a span of just over two months, Johnson managed to quarrel with half of the MPs, to substitute Queen Elizabeth II on the issue of suspending the work of Parliament, which was later declared illegal, to suffer at least 5 defeats in the confrontation with Parliament. Now, Johnson has angered the top officials of the European Union, who believe that the British prime minister is simply "playing the fool", pursuing some personal goals on the Brexit issue, and it is not clear what he is achieving. In words, Johnson wants to conclude a "deal" and withdraw Britain from the EU in a civilized and orderly manner. In practice, over the past two months we have been relentlessly writing that London cannot offer anything to Brussels to revive the negotiations on Brexit. Johnson cannot offer anything either as an alternative to the back-stop mechanism, which would satisfy the European Union. His latest "generous and fair" proposals were skeptical from the very beginning. A little later, there were statements that the whole package of Johnson's proposals did not essentially solve any of the problems. Well, today, after a telephone conversation between Johnson and Angela Merkel, it became clear that the likelihood of concluding an agreement at the EU summit had gone into the negative area. Actually, about 10 days are left before the summit, and Angela Merkel says that Northern Ireland should remain in the Customs Union, otherwise the transaction will not take place. Johnson will not make such concessions, and in any case they will not be approved by the Parliament of Great Britain.

Well, a little later, the head of the European Council Donald Tusk spoke on this subject. He wrote on his Twitter: "It's not about winning some stupid accusation game. The future of Europe and the UK is at stake, as well as the security and interests of EU residents. You don't need a deal, you don't need an extension of Brexit terms, you don't want to refuse Brexit, quo vadis? " Well, now we will see the next series of "Marleson ballet" entitled "How is Boris Johnson going to implement the hard Brexit if the law requires him to ask the European Union to postpone it to January 31, 2020?" Well, the pound has fallen by almost 100 points today and overcame the first support level of 1.2222. Now, for the pound/dollar pair, the road to multi-year lows is again open at around 1.1958. Only good news on Brexit or, for example, an immediate Fed rate cut by 0.5% can stop the British currency's fall. However, the Fed meeting is at the end of the month, by this time the bears will have time to pull down the pound and far below the level of 1.1958. Thus, the British currency urgently needs support from Boris Johnson, who can declare the transfer of the Brexit date for another three months. This is the best thing the prime minister can do for the pound now. In the future, the British currency will be saved from new shocks only by the UK's refusal to withdraw from the European Union or the signing of an agreement ensuring a "soft" divorce between London and Brussels.

Trading recommendations:

The pound/dollar currency pair resumed its downward movement. Thus, we recommend now maintaining short positions with the target of 1.2111. The fundamental background remains on the side of the US currency, so purchases are now impractical.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.

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