GBPUSD: The hope of reaching an agreement on Brexit collapsed again, as did the British pound. Euro stays in a narrow channel

Trading 09 oct 2019 Donner votre avis

The British pound fell against the US dollar and resumed its downward trend, formed on September 20. This happened immediately after the German government confirmed that today there was a telephone conversation between German Chancellor Angela Merkel and British Prime Minister Boris Johnson. As we can see on the chart, the results of this conversation disappointed the market.

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Hopes that Boris Johnson will be able to achieve a new Brexit agreement with the EU are gradually disappearing. After today's conversation with German Chancellor Angela Merkel and the negative reaction of Brussels, it is clear that a new agreement will not be reached by October 31. Official London criticized Brussels' statements, noting that the German Chancellor's demands for the preservation of Northern Ireland in the customs union made the deal "virtually impossible, not only now, but never."

Donald Tusk, President of the European Council, tweeted an address to Boris Johnson. In it, he focuses on stupid proposals that cannot be reached to reach an agreement with the EU, since not only the future of Europe and the UK is at stake, but the security and interests of people. "You do not want a deal, you do not want an extension of the exit period, you do not want to cancel the exit. So what do you want? "Said Tusk.

Considering that now the situation can develop according to any scenario, starting with a vote of no confidence in the prime minister, an erratic exit, voting to cancel the UK exit and ending with the extension of the UK exit from the EU until the end of the year (which is more likely), the pound will continue to stay under pressure. The internal political and internal party differences will further aggravate the situation with Brexit, the deadline for which is October 31. The EU summit, which will take place very soon, is unlikely to be able to save the situation, given the position that European leaders now occupy in negotiations with Great Britain.

As for the technical picture of the GBPUSD pair, now the bulls should be very careful with the return to the market. The first support levels are now visible at the lows of 1.2180 and 1.2150. However, bigger players are likely to show themselves only after updating the ranges 1.2100 and 1.2060. Only positive news related to Brexit, which we are unlikely to hear in the near future, will be able to return new players to the market.

The European currency won back some positions against the US dollar today, but the pair continued to trade in a narrow side channel after the release of a report showing that German industrial production slightly grew in August.

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According to the Federal Bureau of Statistics, industrial production increased by 0.3% in August 2019 compared to the previous month, while economists expected a more moderate growth of 0.1%. However, the German Ministry of Economy noted that, despite a slight recovery, there is a decline in industry, which will negatively affect economic growth in the future, as weak demand persists.

Compared to the same period in 2018, industrial production fell by 4.0% in August.

Data on the confidence of owners of small companies in the United States was also released today, which decreased in September this year. This happened due to the next round of trade duties and growing uncertainty about the future of the economy.

According to the National Federation of Independent Business, the calculated small business optimism index dropped to 101.8 points in September 2019, which is 1.3 points lower than in August. Almost 30% of the respondents said that they were negatively affected by duties.

The technical picture of the EURUSD pair remained unchanged. Only a breakthrough of resistance at 1.0997 will ensure an influx of new buyers, which will lead risky assets to new highs in the region of 1.1030 and 1.1070. If the bears cope with the support in the 1.0955 area, then its break will provide new pressure on the trading instrument, as well as lead the pair to update the lows of 1.0930 and 1.0900.

The material has been provided by InstaForex Company - www.instaforex.com

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