Since the time of the referendum on the membership of Britain in the EU, investors had to get used to the fact that the pound periodically throws it into heat or cold, although it was difficult to believe in it as often as in the fall! Even such "bears" from mid-2016, the portfolio manager of Allianz Global Investors manages € 524 billion ran into the camp of "bulls", after the hawkish rhetoric of Mark Carney and rumors about a deal between London and Brussels. And here you are, sterling collapsed to the founding of the 28th figure against the US dollar amid market uncertainty in the approval of the draft agreement by the British government and parliament.

The "bulls" on GBP/USD pair were not particularly impressed by the expansion of the British pound in a foggy Albion by 0.6% q/q in the third quarter, which is the best trend since the end of 2016. Firstly, after a series of positive monthly data, investors were so optimistic. Secondly, they were embarrassed by the failure of a business investment, which may signal a loss of the economy in the coming quarters. Thirdly, temporary factors have played in favor of Britain: the World Cup, the royal family's wedding and the good weather. Taking into account the dynamics of business activity, it can be assumed that pessimists are right somewhere, casting a shadow of doubt on the likelihood of the Bank of England raising the repo rate not only in May but also in December 2019 market, which is what the bulls are counting on for the pound.

Dynamics of British GDP

The main pressure on the sterling was due to the political news. The Northern Ireland Party protested the draft agreement with the EU, primarily due to border issues. Transport Minister, Joe Johnson, resigned from his post, indicating a split in the government, and his brother, Boris, called for the Cabinet of Ministers to revolt. The Conservative Party spoke of political deception, referring to Theresa May and the EU's formal deal. He will probably be blocked by Parliament. As a result, investors catch any news about the timing of the meeting of the Cabinet of Ministers, which will discuss Brexit issues. This factor seems to be a more significant driver of exchange rate formation than a rich economic calendar.

If you are in the UK, you can't get it. Now the situation is restless. Even though it is the case for the pair, it has been able to show greater sensitivity than the macroeconomic statistics of Albion Both bring uncertainty to the Old World, which adversely affects European currencies. At the same time, it is not difficult to understand the EU. If it allows any kind of indulgence in Italy or Britain, other countries may want to go their way.

Technically, the "bears" should take the level of 1.285 by storm and gain a foothold below it, and then test the support at 1.2655-1.269 to continue the GBP/USD southern campaign in the direction of the target by 161.8% using the AB = CD pattern.

GBP / USD daily graph