4-hour timeframe

The amplitude of the last 5 days (high-low): 56p – 56p – 100p – 100p – 68p.

The average amplitude over the last 5 days: 76p (81p).

Boris Johnson took a step towards the European Union, but he did not really propose any constructive measures. In a letter to Donald Tusk, President of the European Council, Johnson only focused on the impossibility of satisfying the EU's conditions on the rigid border between Northern Ireland and Ireland and offered to find an alternative to the so-called "backstop". Johnson did not put forward any proposals, and he did not say who should look for an alternative. So, we think Johnson tried to kill two birds with one stone with this move. Firstly, in the eyes of the media and the public, to once again become a leader who wants to come to an agreement with the EU amicably in order to avoid the "hard" Brexit. And secondly, it takes a step towards Brussels, hoping that the EU will nevertheless give up the weakness and be afraid of the "hard" Brexit, especially in the light of a possible trade war with the States (read "Donald Trump"). However, we believe that such a step will not have any positive effect, and the fate of Johnson and Brexit will be decided in early September when parliamentarians return from their vacations. That is when the question of a vote of no confidence in Johnson will be on the agenda, and then everything will depend on whether this vote will gain enough votes of support. If he does, Johnson will have to resign. If not, Johnson will remain at the helm, and the opponents of Brexit will need to look for other ways to prevent economic disaster. The pound sterling, meanwhile, made a breakthrough of 50 points up in the US trading session on Tuesday, but the bulls lost interest and the pound/dollar pair rolled back. In general, despite the fact that bears do not attack in the last week, there is no question of any upward trend. It seems that the forex market is just waiting for the next negative messages from the Kingdom to calmly resume the sale of the pound.

Trading recommendations:

The pound/dollar currency pair continues its upward correction. Thus, formally, the purchase of the GBP/USD pair with the target of 1.2196 is formally relevant now, but the volume of transactions should be minimal. We believe that there are still no fundamental factors for a strong pound appreciation.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.

Explanation of illustration:

Ichimoku Indicator:

Tenkan-Sen – red line.

Kijun-Sen – blue line.

Senkou Span A – light brown dotted line.

Senkou Span B – light purple dotted line.

Chinkou Span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD Indicator:

A red line and a histogram with white bars in the indicator window.