FX.co ★ Trading recommendations for the GBP/USD pair on October 5

The GBP / USD pair has recently been working exclusively based on speculation, which remained high in the market due to the latest news over Brexit.

So, as a result, recent trades were of an exclusively short-term nature, that is, local positions in the market.

If we analyze the M15 chart and look closely on all trades set up last Friday, we will see that activity surged at the start of the European session, during which the pound jumped locally to a quote of 1.2952. After that, a pullback occurred, which turned into a consolidation with an amplitude of less than 20 points.

In terms of daily dynamics, the indicator came out at 115 points, which is 3% higher than the average volatility level. High speculative activity remained persistent in the GBP / USD pair, hence, chaotic price jumps kept on emerging in the market.

Thus, at the daily chart, a correction started at the level of 1.2674, and then proceeded in the direction of price level 1.3000.

With regards to news, the latest data for the US labor market was issued, and, according to the report of the US Department of Labor, the indicator turned out much better than expected. Unemployment rate has dropped from 8.4% to 7.9%, lower than the forecast of only 8.3%. Meanwhile, 661,000 new jobs were created outside agriculture.

However, although the data is very positive and signals good recovery in the labor market, traders ignored it and focused on the latest news in the UK, particularly over Brexit.

In that regard, the parties, as before, failed to reach a compromise on key issues of the agreement, especially on fisheries and government subsidies. It remains unclear whether there is a political willingness on both sides to make concessions to each other, but given the fact that the EU plans to sue the UK over the controversial internal market bill, the chances of seeing a trade deal are slim.

Nonetheless, on Friday, UK Prime Minister Boris Johnson and European Commission President Ursula decided to extend negotiations for one more month, renewing the hopes of a post-Brexit trade deal.

"They agreed that huge progress has been made, but that significant divisions remain, especially, albeit not only there, in the fisheries sector. They instructed the chief negotiators to work actively to try to reduce these differences, "the press release said.

However, the market is skeptical about this information, and this can be seen at the Asian trading session.

The latest PMI for the UK services sector was published today, and it came out slightly ahead of the curve, growing from 55.1 to 56.1 as predicted.

As for the United States, a similar index will be released in the afternoon, the forecast for which is good growth in the data as well.

Further development

As we can see on the trading chart, chaotic price jumps occurred in the GBP / USD pair amid persistent speculation, during which the pound consolidated within the current high of the correction. The main driver in the market, as before, is the latest news over Brexit.

Regarding price values, resistance remains around the area of 1.3000, while support remains at the level of 1.2820.

Indicator analysis

Looking at the indicators on the different time frames (TF), we can see that all charts signal BUY due to a consolidation within the current high. However, it should be noted that speculation, as well as latest news, could make indicators give an incorrect signal.

Weekly volatility / Volatility measurement: Month; Quarter; Year

Volatility is measured relative to the average daily fluctuations, which are calculated every Month / Quarter / Year.

(The dynamics for today is calculated, all while taking into account the time this article is published)

Volatility is currently 64 points, which is 42% below the average level.

It is presumed that volatility will continue to grow due to continued speculation.

Key levels

Resistance zones: 1.3000 ***; 1.3200; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support Zones: 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411).

* Periodic level

** Range level

*** Psychological level

Also check trading recommendations for the EUR / USD pair here , or brief trading recommendations for the EUR / USD and GBP / USD pairs here .