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THE GBP/USD. The house of Commons is preparing for war with Johnson: the lb spreads its wings

RSS feed for Forex Review 16.08.2019 at 12:29

Daily analytical reviews of the Forex market

While the Euro against the dollar updates two-week lows, the pound has shown courage, ignoring the General strengthening of the American currency. The British in recent years is trading in its own "coordinate system", when defining priorities among the many fundamental factors. For example, this week the pound has ignored strong macro-economic reports showing rising inflation, wages and retail sales. However, American statistics, which also came out in a positive way, were ignored by the traders of gbp/usd. By and large, the pound responds only to news about the prospects for pulses Brekzita. This theme overlaps all other fundamental factors, and this fact makes a few closeprogram.

will Remind that on Monday the pair gbp/usd has updated its annual minimum, reaching 1,2014. Despite the obvious dominance, the bears were unable to log in 19-th figure, after that the pair have attracted buyers, due to which the price remained in the framework of the 20th figure. Southern momentum has waned not only for technical reasons – rather, a key role is played by fundamental factors. The British began to dive down on the background of active actions of Boris Johnson for the preparation of a "chaotic" Brekzita. He created the so-called "war Cabinet" of Ministers, launched a massive information campaign and delivered a tough ultimatum to Brussels to revise the terms of the transaction. In other words, it is all his behavior made it clear that Britain will not initiate another postponement and ready to leave the EU without an agreement.

Perhaps traders felt the reality of the implementation of stated intentions – such is the rhetoric of the members of the office in Downing street was perceived by the market more as a bluff from London. That is why the pound fell to multi-year lows, but stood on the border between the 20 and 19 figures. To overcome the key support level of 1.2000 need a more compelling reason – and "militant" the intention of Johnson in this context will not help here. Especially since the current Prime Minister is a serious opponent of the British Parliament, MPs who are not ready to satisfy his ambitions, tacitly agreeing to the implementation of the "hard" scenario.

the closer to autumn, the often heard political statements of members of the house of Commons. Another political season in Britain promises to be "hot": no sooner had the leader of the opposition to declare its readiness to initiate Johnson a vote of confidence, there were the first signs that labour and conservatives unite to block "hard" Brekzita. At the moment, about 50 of the labour party expressed their willingness to speak "with one voice" with the centrists of the Conservative party against the apocalyptic plan of the government. In addition, many members of the house of Commons supported the idea of Corbin on the establishment of the provisional government after the announcement of the vote of no confidence in Johnson and prolongation of the negotiation period with the EU.

However, most of the leaders of the political forces has agreed to see Corbin as the head of a government of "national unity". In particular, the leader of the Liberal Democrats suggested for the post of other members. It is noteworthy that representatives of the Green party and the Party of Wales has also tentatively agreed to support this idea. At the moment there are political bargaining, but even the mere discussion of this issue provides background support for the British currency.

Thus, recent developments suggest that the Parliament of great Britain at the beginning of September ready to "show the teeth", shifting Johnson from his post and blocking a hard Brickset. And here it is worth Recalling the events of 5 years ago, when members of the house of Commons passed the signal the vote on all the options Brekzita. Even then it was clear that parliamentarians are largely softened their stance on future relations with the European Union. For example, a variant according to which Britain after Brekzita was to create a customs Union with the EU scored 264 votes. Opposed by 272 MPs, so the advantage was minimal. It is also considered an option which includes the option Common Market 2.0, in which the UK will remain in the European economic area and agree with the EU on a temporary customs Union, in force until, until he will have found an alternative. This option was supported by 188 deputies. Another option suggested holding a second referendum on the country's withdrawal from the EU. This initiative was supported by 268 parliamentarians, whereas 295 voted against it. Previously, such an idea categorically rejected by the House of Commons, with a much larger margin of votes.

If we compare the results of the March vote on the above proposals with more stringent initiatives, the difference in the level of support is obvious. For example, for the option under the letter "B" that is for the country's withdrawal from the EU without signing any agreement, then voted 160 deputies, while against this idea expressed from 400 parliamentarians. I believe additional comments are superfluous.

Thus, the gbp/usd pair at the moment has the potential for further corrective growth, at least to the level 1,2200. The next resistance level is the line Kijun-sen on the daily chart, which corresponds to the price 1,2295.

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