4-hour timeframe
Amplitude of the last 5 days (high-low): 84p - 178p - 104p - 134p - 73p.
Average volatility over the past 5 days: 115p (high).
The British currency has not paid much attention to macroeconomic events and reports in recent days. Yesterday, the Fed meeting and its results were completely ignored, and a little earlier - the consumer price index in the UK, which had every chance of causing strong sales of the pound, turned out to be very weak. But no, pound selloffs did not follow. When was the last time that the pound did not fall, having fundamental grounds for this? But anyway, the British currency holds a leading position against the US currency in September. Today, there were two more important fundamental events for the UK currency, both of which were again ignored by market participants. Everything is clear with the meeting of the Bank of England: the key rate remained unchanged (0.75%), the repurchase volume of bonds remained unchanged (375 billion pounds), the alignment in the vote on the change in the rate remained unchanged (9 - 0), and the speech of Bank of England head Mark Carney was nothing at all. But the data on retail sales on Great Britain in August was the next report in a series of unsuccessful ones. In annual terms, the growth amounted to only 2.7%, and it completely decreased by 0.2% in the monthly indicator. Forecasts, of course, were higher. But the bears did not react to this report at all. What does this mean? From our point of view, this can only indicate one thing. Market participants were so keen on the topic of Brexit and its possible transfer date to January 31 that they do not see or do not want to see other events and news. On the one hand, this is correct, since for the UK it's really not inflation or retail sales that is important right now, but how the process of the country's exit from the European Union will end. All other problems are secondary. However, traders will not be able to ignore all the news until October 31, and possibly until January 31, 2020. Although this is the case at the moment.
Meanwhile, the UK, represented by the government of Boris Johnson, continues to "play" cat and mouse with the European Union. According to unofficial information, the UK has submitted to Brussels "confidential technical documents reflecting ideas, according to Brexit." However, according to a representative of the British government, these documents will receive official status when the European Union "shows a clear desire to deal with the issue of replacing the back-stop mechanism." At the same time, Finnish Prime Minister Antti Rinne said that Britain should submit alternative proposals for a Brexit agreement in writing and formally if it wants the EU to consider them. It is also reported that the EU is not going to negotiate on Brexit at the summit on October 17-18. Moreover, many EU leaders are inclined to believe that a UK Brexit deferment should not be granted at all, as there must be "good reason" for this (for example, re-election to Parliament or a second referendum, or Johnson's desire to conclude an agreement). Since there is no reason now, there is no need to carry out the date transfer, the leaders of some EU member states are certain. In general, the EU's position is simple: Brexit's transfer date will be approved, but there will be no concessions in the Brexit agreement previously agreed upon; alternatives to the agreement will be considered, but they must first be submitted for consideration by the Johnson government.
The technical picture of the pound/dollar pair remains the same. The upward trend persists, however, Bollinger bands indicate a high probability of a flat.
Trading recommendations:
The pound/dollar currency pair is trying to resume the upward movement, but so far it is more and more inclined to flat. Thus, it is now recommended to stay in pound purchases with a target of 1.2590, but we would not recommend opening new long positions.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
