GBP/USD – 4H.
As seen on the 4-hour chart, the GBP/USD pair performed a reversal in favor of the US dollar and began the process of returning to the Fibo level of 61.8% (1.2836). Against the background of an unsuccessful attempt to continue the growth, a narrowing channel was formed, the output of the pair quotes from which will indicate the mood of traders for the next few days. The pound/dollar pair, thus, can perform a rebound from the lower line of the channel, from the Fibo level of 61.8%, also, a bullish divergence is brewing at the CCI indicator. If at least one of these three factors works, traders will be able to count on the resumption of growth of the pair in the direction of the correction level of 76.4% (1.3044).
While the whole of the UK is preparing for parliamentary elections, the results of which may change the ruling party and the Prime Minister, Scotland still insists on holding a referendum on independence. The Prime Minister of this country, Nicola Sturgeon, has repeatedly raised this issue throughout the Brexit period. For the most part, the Scottish people do not want to leave the EU, and this is the starting point in the Scottish government's desire to leave the UK and stay in the EU. A mass rally for independence from the UK was held in Glasgow, attended by about 20,000 people. Nicola Sturgeon says that the victory of Boris Johnson's party in the elections in December will mean that "Scotland will be torn out of the European family." There can be no doubt that Scots are unlikely to cast their votes for the Conservative Party on December 12.
Boris Johnson, by the way, is not going to meet Scotland and its desire to hold a new referendum on independence. The Prime Minister now has a huge number of problems associated with the upcoming elections, in which, if he and his party are defeated, then Brexit can be forgotten for months or even years. Or hold parliamentary elections every six months, hoping that some of the deputies still ratify the agreement with the European Union. If we talk about the prospects of the pound, the information background is unlikely to have much impact on the currency over the next month. Tomorrow, the Parliament will be officially dissolved as part of the procedure of preparation for the elections. Thus, no news will come from it. Economic reports from the UK leave much to be desired. Thus, if the three factors mentioned at the beginning of the article do not keep the pound/dollar pair above the Fibo level of 61.8%, then I would assume a new fall in the British currency.
Forecast for GBP/USD and recommendations:
The pound/dollar pair maintains growth prospects in the direction of the correction level of 76.4% (1.3044). Today, I expect the pair to either rebound from the lower line of the channel or the level of 61.8%. If this does not happen, the bear traders will be activated, and the pound will again be subject to sales. The PMI for the UK services sector is unlikely to help the pound much, however, in the case of a strong excess of the expected value (49.6), traders may also buy the pound. After all, a value above 50 will indicate the stabilization of the negative situation in the service sector.
The Fibo grid is based on the extremes of March 13, 2019, and September 3, 2019.
