Author: Dmitri Gurkovskiy, senior analyst at RoboForex
Strange though it might sound, but the British Pound is slowly falling at the time when the US Dollar is unstable, and there is no negative news and other problems relating to the Brexit coming from the United Kingdom. In the middle of the fourth week of August, the GBP/USD pair is trading at 1.2800, which is the lowest level for the instrument over the last couple of months. The question is: what is it exactly that is putting pressure on the Pound and where might it all lead to?
The Pound fans don’t pay much attention to the statistics right now, because it’s pretty smooth, from the inflation rate on down to the neutral labor market. The next important report, the second estimate of the GDP Growth Rate in the second quarter 2017, will be published on Thursday. The Brexit gives the market no peace. A lot of investors’ attention is focused on bilateral documents as they try to analyze positions of both the European Union and the United Kingdom. So far, it looks more like a political dialogue, which implies discussions and consensuses for several legal aspects. Since there is no such experience, I mean exiting the EU, the procedure is very slow and careful.
It is known that at the moment the British government is preparing the documents for getting beyond the European Court of Justice jurisdiction. This is a significant step, which is aimed at the absolute control over the internal legislation. For example, in the future the United Kingdom will the sole right to manage its migration policy, which is a very serious and important issue in the modern Europe. At the same time, standards of international law will be applied as before.
However, the market is moving away from the Pound and risks, because this is the first time exiting procedure is taking place, and investors have no idea where it all might lead.
From the technical point of view, there are no strong support levels for the GBP/USD pair up to 1.2700. There might be some “bullish” interests in the range between 1.2825 and 1.2850, but if the market starts massive and global sales, this range will not stop the “bears”. The market’s attitude to the GBP/USD right now is “bearish”.
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.