4-hour timeframe
Amplitude of the last 5 days (high-low): 78p - 66p - 70p - 134p - 97p.
Average volatility over the past 5 days: 89p (high).
Thanks to a weak macroeconomic report on the ISM index of business activity in the US ISM services, the British pound continued to rise against the US dollar at trading on Thursday, September 3. But it started to rise in price clearly for other reasons. These reasons do not lie in the fundamental reports from the UK, as the only single indicator today - the index of business activity in the service sector - and that failed, amounting to only 49.5. There was also no news that increased the likelihood of a "soft" Brexit or its delay. On the contrary! It is not surprising, but the European Parliament has made an official statement regarding Boris Johnson's "generous" and, most importantly, "timely" proposal on the border between Northern Ireland and Ireland. In short, the European Union rejected the proposal of the British prime minister, saying that "the Brexit steering group does not believe that the proposals made by the British government on October 2 - at the last moment - constitute an agreement to which the European Parliament can agree." As you can see, European politicians also focus on the phrase "at the last moment". Indeed, why is Johnson just now making a similar proposal to the European Union? Why didn't he do it before? Because he previously believed that it would be possible without real interference and obstacles to simply implement a hard scenario? Because he wants to show the world that he wants to come to a consensus with the European Parliament, but is it the EU government that rejects his proposal? In general, Boris Johnson is frankly difficult to understand, but the whole story of his relationship with European leaders really does not look like a sincere and honest game. The European Parliament's statement also said that the Johnson deal "does not address the real issues that need to be addressed, in particular, the economy of the entire island of Ireland, the Good Friday Agreement and the integrity of a single market." "Boris Johnson's proposals do not even remotely resemble what was agreed by the parties as an alternative to backstop." According to the plan of Boris Johnson, Great Britain, and with it, Northern Ireland, will leave the Customs Union, and the border on the island of Ireland will only be formal. That is, there will be no customs points and checks on it. All declarations will be filled out electronically; accordingly, all checks will be carried out remotely, and not at the border itself. Moreover, if the police or customs will need to check a particular car, it will be done again, not at the border, and at special points. It is very difficult to understand what is the meaning of this plan. All the same checks, the same declarations, only 10 km from the actual border between Ireland and Northern Ireland. Not surprisingly, the European Union rejected the London proposal.
But it is surprising that the pound is growing when there is no special reason for this (except for the ISM report of the United States, which, incidentally, is not as disastrous as it seems at first glance). After a rebound from the first support level of 1.2203, the GBP/USD pair stayed in one place for several days, after which it rushed up today. At the moment, the price is inside the Ichimoku cloud and, from a technical point of view, a new buy signal from Ichimoku has formed. However, it is weak, so buying the pound is not yet recommended.
Trading recommendations:
The GBP/USD currency pair has started an upward movement. Thus, we recommend now to wait for the Ichimoku cloud to overcome and the resistance level of 1.2435, and only after that start trading to increase with the goals of 1.2487 and 1.2584, since there are few fundamental reasons for the strong strengthening of the British currency.
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.
