On Friday, November 15, the British pound strengthened slightly and even a third wave formed upward on GBPUSD, on the H4 timeframe, which indicates the presence of an uptrend.
However, there is no reason to continue strengthening the British currency other than the market expectations for Brexit. That is, it is difficult to even imagine how strongly most traders believe in a successful Brexit outcome on January 31? If they believe strongly, then the pound may continue to strengthen. However, we still believe that the strengthening of the British currency will be either extremely restrained or absent altogether. Since Brexit by and large remains in limbo and will remain so at least until December 12, it is unlikely that for almost a month the British currency will grow solely on the positive expectations of traders. Moreover, sooner or later, traders will “remember” that the last five most important reports from the UK were completely disastrous. They will also “remember” that two members of the Bank of England monetary committee voted “in favor” of lowering the rate, which means that at the next meeting their number may increase to 3-4. And five votes is enough for the rate to be lowered. Of course, an event such as monetary easing, traders can also ignore. But turning a blind eye to such events will always fail.
Based on the foregoing, we can assume that until December 12, the pound will not be prone to strong growth, but its strengthening is allowed, since it will not be possible to predict the majority mood in the market over the next month. In any case, a strong strengthening of the pound is not expected.
The experience of real trading revealed the following: sometimes the take-profit value turned out to be less than the spread size. This led to losses. Now the comparison of the spread with the target values of the opened position has been introduced. If the spread exceeds the target size, the robot will wait for the spread to drop to an acceptable value, after which it will check all the criteria again. This completely excludes the opening of the transaction if the spread is greater than the gap. This reduces the losses from high spread entries.
In the first half of next week, the current strengthening of the dollar may weaken a little due to the lack of important economic news. It will most likely be a small rollback. In general, trends in the Forex market will determine the statistics of the EU, Asian countries and the UK, and by the end of the week we are waiting for the next strengthening of the dollar. This is explained by the fall of the global economy. But the US economy has a greater margin of stability, therefore, it is falling more slowly than the European economy. This also coincides with the results of a technical analysis of the markets; everything indicates a strengthening dollar in the near future.
Pound movements can be unpredictable. Great Britain is in a state of pre-election race, which started on Wednesday, during which unexpected revelations and political alliances may arise.
What’s up with Brexit? At the moment, everything goes to the fact that Boris Johnson will resign, as well as Theresa May earlier. Teresa May failed to convince Parliament that she was right. Boris Johnson, who is openly waging war with parliamentarians, has even less chance. Sooner or later, a vote of no confidence will be put on the agenda. And although the vote is not an official order to resign as prime minister, this will be a step in the direction of the resignation of Boris Johnson. Sooner or later, questions will arise: “What did Johnson achieve in the few months of his reign? Which of his campaign promises did you realize? ” And the answers to them are so far obvious. The divorce proceedings between Brussels and London may well drag on for another year or two. The prospects for the British currency are still not as bright. After traders have gone through a week of euphoria due to the decrease in the probability of a “hard” Brexit in the near future to almost 0, it is time to return to harsh weekdays and understand that a “hard” Brexit may not exist, but the “divorce” procedure does not move with Dead center. And she cannot constantly be in such a suspended state. The British pound in the coming week will again be prone to fall, even if the Fed continues to soften monetary policy.
Most of the news coming from the UK next week. On Tuesday, it will be data on unemployment and average wage changes for August, on Wednesday – the consumer price index for September, on Thursday – retail sales and the European Union summit on Brexit starts. In addition, the United States will receive information on retail sales for September. However, despite the importance of future reports, the main attention of traders will be focused on Brexit, on the EU summit and on any information from Boris Johnson, Donald Tusk, Jean Claude Juncker, Michel Barnier, Angela Merkel, Emmanuel Macron. It is these actors who most often speak out about the promotion of the Brexit negotiation process and have the greatest influence on it. Regarding the chances of fulfilling one or another Brexit option, traders are advised not to try to guess the future. Brexit has repeatedly shown to all market participants that trying to predict how everything will end is an ungrateful affair. The growth of the pound was often associated with “pure water” rumors and unfounded market expectations, which each time gave way to a stronger fall in the British currency. That is why the movement of the pound / dollar pair this week may well be illogical and consistent with the nature of the incoming news. Thus, next week, when trading the GBPUSD pair, special care must be taken. As for the EURUSD pair, one of the important events is the report on the change in industrial production in August on Monday, and the inflation report for September on Wednesday. The greatest interest, of course, will be caused by the consumer price index, which in recent months has fallen to absolute lows. A value below 1.0% will no longer be considered just low, but critical. And then it can be expected from the ECB and a new reduction in key rates, the quantitative stimulus program in the first months of its operation is unlikely to be changed, but it can be expanded in the future. And for the euro, these are all potential bearish factors. In confrontation with the dollar, the euro has very few trump cards. And the main factor behind the growth of the euro at the moment is simply the technical need to adjust from time to time. There is no positive news from the EU. In the USA, recently, not everything is good either, but America’s economy is still stronger, macroeconomic indicators are higher, monetary policy is tougher. It is these factors that continue to play for the dollar.