Yuri Papshev
Independent Analyst
Amid the risks to the British economy, the GBP / USD resumed falling due to the increased likelihood of a “hard” Brexit. Economists and government officials warn that a tough Brexit will negatively impact the economy.
Boris Johnson, who succeeded Theresa May as a prime minister, said he was ready for a "hard" Brexit. On October 31, Great Britain must finally withdraw from the EU, even if no agreement is reached between the parties. In his view, "the exit agreement is dead and should be canceled, but there is the possibility of a new deal".
Boris Johnson is scheduled to meet with EU leaders this week. Probably, following the results of these meetings, new negative news for the pound will appear. The UK government reiterates its intention to withdraw the country from the bloc by October 31, and the EU does not intend to revise the earlier exit agreement.
Labor leader Jeremy Corbin has called on various parties to vote no confidence in Prime Minister Boris Johnson in order to remove him from his post and make Brexit possible to a later date.
Nevertheless, the efforts of Jeremy Corbin to prevent a hard Brexit so far have little effect on the dynamics of the pound. Investors are preparing for the worst scenario.
Long-term negative dynamics prevail. The immediate goal of the decline is the support level of 1.2000 (2017 lows and the Fibonacci level 0% of a correction to the GBP / USD decline in a wave that began in July 2014 near the level of 1.7200).
We can return to the consideration of long positions only after the pair will grow into the zone above the resistance level of 1.2280 (ЕМА200 on the 4-hour chart and the upper line of the downward channel on the daily chart).
However, growth above the local resistance levels of 1.2480, 1.2530 is unlikely. In the current situation, so far only short positions on the GBP / USD should be considered.
Support Levels: 1.2000
Resistance Levels: 1.2120, 1.2210, 1.2280, 1.2480, 1.2530, 1.2740
Trading Scenarios
Sell by market. Stop-Loss 1.2180. Take-Profit 1.2000, 1.1900
Buy Stop 1.2180. Stop-Loss 1.2080. Take-Profit 1.2210, 1.2280, 1.2480, 1.2530
GBP/USD Current Trading Positions
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