British Pound Manages to Keep Balance
By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets
The Brexit news remains the key driver for the British Pound – last week, the news helped the Pound get stronger against the USD despite weak numbers.
So, the British currency reached the highest levels since September 20th 2018 and it happened because the amount of concerns around the “agreementless” Brexit scenario among investors went down significantly. Apart from this, market players have been actively discussing a possibility of another referendum offered by the Labour party. One more thing to support the Pound was the Inflation Report Hearings, where the Bank of England Governor Mark Carney was very confident and positive and said that there were no signs of liquidity stresses on financial markets.
In addition to that, last week British Prime Minister Theresa May offered to vote on cancelling Brexit, which is scheduled for March 29th. The rumor has it that this delay may last until, for example, May 2019, when the European Parliament is set to be elected. The delay is quite an interesting option because in this case the chances of exiting the European Union without an agreement are not so high.
The European Union has already responded to this news by saying that the Brits should have really serious reasons for postponing the Brexit.
Amid this Brexit scenario, no one paid much attention to weak economic data from the United Kingdom last week. For example, the Manufacturing PMI dropped down to 52 points in February after being 52.6 points the month before. Although this decline wasn’t against market expectations, the current reading turned out to be the worst in the last four months.
As one can see in the H1 chart, GBPUSD is about to complete the descending correction, which is confirmed by “Golden Cross” inside the “oversold zone” on Stochastic. In this light, in the nearest future the pair is expected to break the local resistance line at 1.3260 and then continue the rising impulse towards the next resistance line at 1.3410 (close to 50.0% Fibo). The support level for the current tendency is at 1.3170. If the price breaks it, the instrument may continue falling to reach the long-term support line at 1.3000.
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.