4-hour timeframe
Amplitude of the last 5 days (high-low): 58p - 84p - 178p - 104p - 134p.
Average volatility over the past 5 days: 111p (high).
The British pound, as, in principle, and the euro, ignored the UK inflation report for August. Despite the fact that the annual rate fell to 1.7%, although the previous value was 2.1% and the forecast was 1.9% y/y, there were no sales of the pound. But at the same time, no upward movement was observed during the day. In this situation, there can only be one explanation: traders are waiting for the results of the Federal Reserve meeting, fear of possible surprises, so they simply do not want to take risks and enter the market. The most interesting thing is that no matter what the results of the meeting of the Fed's monetary committee today, the results of the Bank of England meeting will be announced tomorrow, respectively, the pound will remain in limbo until tomorrow and with full combat readiness to move in any direction. It makes no sense to guess what decision the US regulator made and what the market will react to this decision. The results will be followed by a speech from Jerome Powell, in which he will orient the markets on the Fed's further policy, expectations and forecasts of the regulator.
Meanwhile, 544 members of the European Parliament supported the bill today, allowing Britain to get a respite on Brexit. Only 126 deputies voted "against" and another 126 abstained from voting. This resolution implies that if the UK needs to postpone Brexit and there will be some "specific purpose" behind this decision (probably a hint of an agreement with the European Union or a possible second referendum), the European Parliament will meet London halfway. At the same time, if a "hard" Brexit takes place, the responsibility for it will be borne by London, and this does not absolve it from financial obligations to the EU, as stated in the document. From our point of view, this is a very competent step by Brussels. It is no secret that the European Union is not eager to lose the UK and still hopes to keep it in its composition. Perhaps that is why it persists in the issue of "backstop" and does not want to categorically make concessions. But the postponement of Brexit to a later date, firstly, gives new chances to come to an agreement and get amicable, and secondly, new chances for a second referendum and/or the removal of Boris Johnson from his prime minister's position, which will definitely move hard Brexit from the horizon. The EU also makes it clear to the public that it is ready for a dialogue on a "deal" (but the UK does not offer any alternatives to the back-stop mechanism), or to postpone the Brexit date (but the British prime minister refuses any delays).
As for Boris Johnson, it can be said that his next plan completely failed. Unless, of course, the information about the "second letter" to the leaders of the European Union, in which Johnson asked not to grant an extension on Brexit, was not a "sham". Now, Johnson is obliged by British law to ask for a delay, which the EU is already ready to provide, unless an agreement between London and Brussels is signed by October 17-18, which will be approved by (!!!) Parliament. That is, even if it is purely hypothetical to imagine that Johnson somehow manages to come to an agreement with the EU, this does not mean that the deal will suit the British MPs, who previously blocked Theresa May's deal three times.
From a technical point of view, the upward trend for the pound/dollar pair is maintained. However, extremely important fundamental events will take place today and tomorrow that can completely change the current technical picture.
Trading recommendations:
The GBP/USD pair completed another small round of downward correction and is again trying to resume the upward movement. Thus, it is now recommended that you stay in pound purchases while aiming for 1.2590, but also remember Stop Loss orders just in case.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
