Trading in the GBP / USD currency pair yesterday also took place at increased volatility. Although the British currency has all the most interesting things ahead, and perhaps we will see even larger movements this week after the publication of the report on inflation in the UK and the decision of the Bank of England on the interest rate. But these events will take place only tomorrow, but for now the dynamics of trading largely depends on the fluctuations of the American currency, which in recent days has been very volatile in the confusion that is happening now primarily on the US stock markets.
Given the lack of important macroeconomic data today, the market situation is likely to continue and the course of trading will be determined by the dynamics on global stock markets, as well as the change in the yield spread of 10-year US and UK government bonds.
But today there are also possible surprises from the British Cabinet of Ministers, which today and tomorrow will confer on the trading conditions after the United Kingdom’s withdrawal from the EU. Traders will closely follow the possible news, especially related to the discussion of the creation of a customs union of Great Britain and the EU.
But in general, it is worth noting that on the eve of important events that the British pound is expecting tomorrow, investors are unlikely to actively increase the volume of positions in this currency, preferring to remain outside the market for now, which ultimately will significantly limit the growth potential of the GBP / USD pair .
Technically, the situation is still ambiguous. Indicators after the recovery of the currency pair in the second half of the day changed their direction of movement from descending to ascending, but on the chart we see that the price is still held below 1.3980, which previously served as support for the price, and now acts as resistance. Therefore, in the current situation, only a small margin is on the side of the scenario, which provides for a further moderate price reduction. It will be possible to talk about a change in sentiment after the price fixes above 1.3980.
Our recommendations: we are out of the market