GBP/USD: Brexit - the main problem for the pound

GBP/USD: Brexit - the main problem for the pound

30 October 2018, 14:01
TifiaFX
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Investors continue to analyze the budget submitted on Monday. Finance Minister Philip Hammond announced the completion of the savings regime, signaling an increase in government spending in the coming years. He expects that by the end of the fiscal year ending in March 2024, the budget deficit will be reduced to 19.8 billion pounds. This view is partly based on higher forecasts for economic growth and tax revenues over the next two years.

Nevertheless, the ongoing negotiations on Brexit create a high level of uncertainty about the prospects for the economy. Brexit hard probability, i.e. UK exit from the EU without any agreement, puts pressure on the pound and the British stock market.

The budget presented on Monday depends on reaching a favorable Brexit agreement. And until the agreement on Brexit has been reached, the realization of the largest spending in eight years remains in question.

In the case of a hard Brexit, a deeper drop in pounds is likely.

On Thursday, a meeting of the Bank of England will be held, and at 12:00 (GMT) the decision on rates will be published. It is expected that the rate will remain at the current level of 0.75%. A speech by Bank of England CEO Mark Carney, scheduled for 12:30 (GMT), could stir up markets if he makes unexpected statements. The soft rhetoric of Carney will further lower the pound and the pair GBP / USD.

*)An advanced fundamental analysis is available on the Tifia Forex Broker website at tifia.com/analytics


 Support and Resistance Levels

Long-term negative dynamics prevails below the key resistance level of 1.3210 (ЕМА200 on the daily chart and the Fibonacci level of 23.6% of the correction to the decline of GBP / USD in the wave that started in July 2014 near the level of 1.7200).

In the case of a confirmed breakdown of the support level of 1.2780 (bottom line of the downward channel on the daily chart) GBP / USD will go inside the downward channel on the weekly chart, the lower limit of which near the 1.2000 mark (2017 lows) is passing. The immediate goal of reducing GBP / USD is at the support level of 1.2660 (2018 lows).

The signal for the start of corrective growth will be the breakdown of the short-term resistance level of 1.2915 (ЕМА200 on the 1-hour chart). The maximum correctional growth is possible not above the resistance level of 1.3010 (ЕМА200 on the 4-hour chart, ЕМА50 on the daily chart).

Support Levels: 1.2700, 1.2660, 1.2590, 1.2365, 1.2110, 1.2000

Resistance Levels: 1.2855, 1.2915, 1.3010, 1.3210

 

Trading Scenarios

Sell ​​in the market. Stop Loss 1.2860. Take-Profit 1.2700, 1.2660, 1.2590, 1.2365, 1.2110, 1.2000

Buy Stop 1.2860. Stop Loss 1.2750. Take-Profit 1.2915, 1.3010, 1.3210

*) For up-to-date and detailed analytics and news on the forex market visit Tifia Forex Broker website tifia.com

 


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