Pound Still Afraid of Brexit

The United Kingdom and the European Union are less than 6 months away from the moment when they have to wrap up the Brexit talks. In fact, in the nearest future politicians of both parties should become more active. Right now, the British financial sector is starting to assess what is going on in the country’s economy in a fresh new way and it seems that the future is scaring them.

According to the survey conducted by the Confederation of British Industry, the third of those surveyed aren’t sure that the Brexit procedure will start within the time specified, i.e in March 2019. Most of all, they are worried about trans-border contacts and transfers, which may really “glitch” during the transition period, which will last until the end of 2020.

British companies, including financial ones, still don’t know within which legal domains they will operate during the transition period. The conditions haven’t been ratified yet and the parties may spend really much time on final agreements. Another thing, which is still not quite clear, is how the United Kingdom and the European Union will continue trading. Right now, British companies believe that the transition period may become some kind of “the Time of Troubles”, when they may face a lot of obstacles. Of course, such things don’t make the Pound more optimistic.

Later in the afternoon, the United Kingdom will report on the Construction PMI, but investors aren’t likely to respond to these numbers, because after that they will be presented the FPC Meeting Minutes, which seems much more interesting.

The current descending tendency is keeping GBPUSD inside the long-term channel. If one takes a closer look at the channel, it can be seen that the pair has failed to reach the support line while updating the lows, which means that the tendency is getting weaker. The same can be told about the short-term downtrend. However, the main “event“ is the price’s testing the resistance lines of both short-term and long-term channels. If the pair fixes above the resistance line, it may start a new rising impulse towards the resistance line of the projected channel at 1.3330. Still, if the instrument breaks the support line at 1.3095, it may continue falling towards the psychologically-crucial level at 1.3000. But the main target of the short-term downtrend may be the support level at 1.2870.

This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex