The sentiment of investors in the markets remains completely subordinate to the development of the situation around Brexit, US-Chinese trade negotiations and the growth of expectations of the beginning of a recession in the global economy.
Moreover, the situation of the market is still very ambiguous and difficult to imagine what the markets will expect in the near future. The focus now is not even the resumption of soft stimulus measures by the ECB and the Fed, but the expected denouement around Britain's exit from the EU, the debate on which has not ceased for the third year. The influence of this "event" is so significant for the markets that they gossip about it without ceasing. The reason for this, of course, is the magical date of October 31, when the "foggy Albion" will either reported to leave the EU with or without a deal, or already permanently remain with all its reputational losses.
The rate of the British currency in the wake of this event constantly balanced between growth and decline. Earlier, when the idea of leaving the country without a deal won, it fell to many-year lows, but over the past week in the political confrontation, the expectation of some agreement, what is called a deal in Europe, still prevails. Against the background of a change in these expectations, the pound has noticeably gained markedly over the past week and could rise further if this idea dominates the remaining time until the end of the month.
A similar picture is also noted in relation to the single European currency, which receives support against the background of the emerging situation around Brexit. Investors pushed into the background the fact of the expansion of incentives from the ECB, the ambiguity of future actions regarding the monetary policy of the Fed, concentrating completely on this topic.
Thus, what should you expect in the near future? In our opinion, the general condition of the markets will continue, which will contribute to the overall preservation of lateral dynamics. The successes of corporate reporting of American companies or their failures will force major US stock indexes to move in wide lateral ranges. A similar picture, in our opinion, will be observed in the commodity market, as the absence of clear reasons for both the rise and fall of prices will keep them on the "sideways". The currency market will also nervously respond to rumors and news on Brexit's topics, the negotiation process between Washington and Beijing, as well as the ever-increasing risk of the global economy stalling into a recession.
Forecast of the day:
GBP/USD may correct to 1.2595 if it declines below the level of 1.2745. We consider it possible to continue purchases with a possible target of 1.2980.
The AUD/USD pair is consolidating within the short-term upward trend. The pair, on the daily chart, also draws a "double bottom" reversal pattern with a possible promising exit to the level of 0.7000. But for now, it is likely to adjust to the level of 0.6740, if it falls below the level of 0.6775. In addition, we consider it possible to buy the pair on the decline with a target level of 0.6810.
