Labour Party Lifts the Pound
By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets
The British Pound is doing pretty fine in the last week of January. GBPUSD is trading close to its local highs and this movement has serious fundamental reasons.
Last week, the British Labor party, the opposition in other words, said that they wouldn’t exclude a possibility of supporting the Brexit agreement prepared by Prime Minister Theresa May. Opposition policymakers don’t consider the idea of leaving the European Union in “chaos” without any trade agreements to be worse than May’s plan, but they are ready to choose the better of two poor options.
After several days of sparkling optimism on the market, the rumors had it that the Labor party could change their minds at the last second and vote in a different way than it was expected to. However, the number of optimists is currently bigger than pessimists. The vote on the Brexit agreement with the European Union is scheduled to take place on January 29th. Mildly speaking, the situation is rather an alarm because the Brexit date, March 29th, is just two months away, while the key documents remain unsigned.
At the moment, the pound is also supported by the declining USD. The first meeting of the US Federal Reserve in 2019 is ahead and market players believe that the regulator is selling its assets slower that it was planning earlier.
In the H4 chart, GBPUSD is trading upwards steadily. The pair has already reached the retracement of 38.2% and right now is testing the resistance line at 1.3216. Both scenarios are possible (breakout or rebound). In case the price rebounds, the instrument may fall towards the support line at 1.2975. Otherwise, the pair may start a new rising impulse towards the retracements of 50.0% and 61.8% at 1.3386 and 1.3620 respectively.
As we can see in the H1 chart, the pair has reached the resistance line and there is a divergence on the Stochastic Oscillator, which indicates a new correction. This short-term decline is heading to reach the support line at 1.3130. If the price breaks the line, the instrument may fall towards the downside projected channel and its support level at 1.3025.
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.