According to the manager of the Bank of England Mark Carney, Brexit and the exit of the UK from the EU without an agreement - “this is a real economic shock, so central banks will play secondary roles”. In this situation, raising or lowering interest rates by the Bank of England is not so important for the economy.
Mark Carney said on Tuesday in Parliament, the Bank of England’s management does not doubt the ability of UK banks to withstand if Brexit negotiations end in nothing. The probability of a Britain exit from the EU without an agreement has grown to about 50%.
Last week, British Prime Minister Theresa May proposed her plan to conclude an agreement with the EU on Brexit.
According to the representative of the Bank of England, Michael Sanders, British companies are not ready for the fact that the country's exit from the EU will take place without an agreement on further trade relations.
Uncertainty is growing, and it is not yet clear whether the country's prime minister Theresa May can convince parliament to support the agreement reached with the EU. All of these are negative factors for the pound. A pair of GBP / USD is prone to decline amid problems with the promotion of the Brexit project in the British Parliament and rumors about the possible resignation of Theresa May.
*)An advanced fundamental analysis is available on the Tifia Forex Broker website at tifia.com/analytics
Support and Resistance Levels
GBP / USD continues to trade in a long-term downtrend. Despite the current correctional growth, short positions are preferable. The situation around Brexit remains the main negative factor for the pound.
A breakdown of the short-term resistance level of 1.2897 (ЕМА200 on the 1-hour chart) may trigger a further corrective rise to the resistance level of 1.2962 (ЕМА200 on the 4-hour chart, ЕМА50 on the daily chart). Further growth is unlikely until an agreement is reached on Brexit.
Below the key resistance levels of 1.3210 (Fibonacci level 23.6% of the correction to the decline of the GBP / USD pair in the wave that started in July 2014 near the level of 1.7200), 1.3180 (ЕМА200 on the daily chart) negative dynamics prevail.
Support Levels: 1.2730, 1.2660, 1.2500, 1.2365, 1.2110, 1.2000
Resistance Levels: 1.2897, 1.2962, 1.3030, 1.3180, 1.3210, 1.3300
Sell in the market. Stop Loss 1.2910. Take-Profit 1.2730, 1.2700, 1.2660, 1.2500, 1.2365, 1.2110, 1.2000
Buy Stop 1.2910. Stop Loss 1.2820. Take-Profit 1.2962, 1.3030, 1.3180, 1.3210, 1.3300
*) For up-to-date and detailed analytics and news on the forex market visit Tifia Forex Broker website tifia.com