Wave Analysis by InstaForex

Forecast for EUR/USD for July 31, 2019

On Tuesday, the euro came under pressure from unfavorable economic statistics, but investors missed the data ahead of the Fed's FOMC decision on Wednesday. French GDP for the 2nd quarter was 0.2% against a forecast of 0.3%, personal incomes and consumer spending in the US showed an expected increase of 0.4% and 0.3%, respectively. But trading volumes were not large, as the euro rose by 11 points.

The price reached a Fibonacci level of 110.0% on the daily chart, where it stayed until today's Asian session. The signal line of the Marlin oscillator was discharged - it rose upwards, which may be a sign of a continued decline in case of favorable fundamental component.



On the four-hour chart, the price reached the balance and MACD line, and also lingered in them. The primary signal for a further decline is the departure of the price below 1.1132. Next, we expect to overcome the support zone of 1.102/12 and further decline to 1.1074 and 1.0985.



But today, the Fed will announce the decision on the rate with a market likelihood that it would decrease by a quarter point at 100%. The risk of a short-term growth in the euro to the line of the price channel at 1.1202 (daily), of course. In our opinion, today's rate cut is quickly being absorbed by the market, since, in parallel with the Fed, the European Central Bank also pursues a policy of easing, and amid deteriorating European economic indicators. Western media claim that the Fed rate cut has already been taken into account in the price. We do not agree with this statement, but the message is clear - financial institutions do not want a weakening dollar, which fits into our concept of a strong dollar in the long run.

Therefore, we see two scenarios for the euro's near development: an immediate downward movement after a decision on the rate, and especially after Jerome Powell's press conference, where a pause in the mitigation cycle can be mentioned, and a downward movement after a short-term growth to 1.1202.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

GBP/USD. "Super Thursday" will not help the pound

The pound-dollar pair demonstrated correctional growth today after updating its annual low and reaching two-year price troughs. Bears of GBP/USD could not enter the 20th figure, after which the bulls seized the initiative and nearly 100 points passed in a day. This dynamic is mainly due to technical factors - an overabundance of short positions in the British currency makes itself felt.



In addition, the market "remembered" that the prime minister of Britain, with all his desire, cannot single out the country from the EU - this requires the approval of the Parliament. Ironically, the House of Commons, after several years of confrontation with the government of Theresa May and Brussels, can become an unexpected ally of the Europeans, stopping the implementation mechanism of the chaotic Brexit. Deputies have already taken preventive measures by adopting an amendment to the law on self-government in Northern Ireland. This provision does not allow the prime minister to stop the Parliament's work, which can quickly block withdrawal from the EU without an agreement. In turn, Johnson can decide on early Parliamentary elections, hoping to get the majority under control. There are several other scenarios, one of which is the announcement of a vote of no confidence in the newly minted premier. In any case, Johnson faces a difficult struggle within the walls of the British Parliament, whose members, as we recall, did not support the option of a "hard" Brexit during a signal vote at the beginning of this year.

This disposition made it possible for the pound to move away from the level of two-year lows. On the other hand, the British currency continues to be under strong background pressure, as Brexit prospects remain dim - even if Parliament does not allow Johnson to withdraw the country from the Alliance without an agreement on October 31. London and Brussels are still at different poles on many issues - which includes the fate of the Irish border. Therefore, this political rebus will remain unresolved in any case - until one of the parties makes substantial concessions.

Given the current situation, any growth in the British currency should be treated with caution. Here it is worth recalling that the so-called "super-Thursday" is expected tomorrow, when several important events take place within a day: the Bank of England meeting, the release of the quarterly report on inflation and the publication of a summary of monetary policy. The news marathon is completed by Mark Carney, who will hold an extended press conference. Such a "news jackpot" is relatively rare, so traders are unlikely to ignore it, despite the undeniable priority of the Brexit issue.



However, these issues can not be separated from each other. Last year, the head of the Bank of England warned of the extremely negative consequences of a hard Brexit. In particular, he said that if Britain withdraws from the EU without a deal, then the country will have to rely on the conditions of the WTO. The head of the English regulator even admitted the likelihood that the monetary policy in this case would be revised in the direction of easing. Since then, Carney's rhetoric has not undergone any fundamental changes. He does not tire of repeating that the prospects for monetary policy depend primarily on the prospects for the negotiation process. Moreover, the transfer of Brexit in this context will also not be an acceptable solution, since in this case the period of uncertainty will only be extended. In other words, the English regulator unequivocally associated a further increase in the interest rate with a soft Brexit, and Mark Carney consistently advocated this causal relationship.

Given the recent events, the head of the Bank of England is unlikely to toughen his rhetoric - on the contrary, he can describe in more detail the prospects for the chaotic scenario. That is why tomorrow's inflation report and monetary policy summary will play a secondary role, and the focus of GBP/USD traders will be on Carney's rhetoric. Also, do not forget that the English regulator closely monitors the dynamics of the global trade war. Let me remind you that the 12th round of talks between Beijing and Washington was completed ahead of schedule today. The parties noted "some progress" and agreed to meet again in September. The market clearly expected more from this meeting, so anti-risk sentiments returned to the market. This factor can also affect the mood of the members of the English regulator, reinforcing their "dovish" attitude.

Thus, the "super-Thursday" is unlikely to help the British currency in restoring its position. Against the background of the Brexit lull, the pound will follow the US currency in anticipation of the next news drivers. Therefore, the trading strategy for the GBP/USD pair remains unchanged - short positions for any more or less large-scale correctional growth.

Analysis are provided byInstaForex.

GBP/USD. Unexpected dollar weakness and hopeless pound prospects

The US dollar unexpectedly stopped growing in almost all pairs in the afternoon. The EUR/USD pair pulled back from the bottom of the 10th figure to the level of 1.1085, the USD/JPY pair dropped to the bottom of the 108th figure, and the aussie again went to conquer the 69th price level.



In varying degrees, the greenback surrendered its positions in the remaining pairs. The pound-dollar pair was no exception: after the price again updated its annual low of 1.2078, a rather sharp reversal and growth followed in the middle of the 21st figure. By and large, a corrective pullback was expected, as the pair was gradually approaching its record high, that is, to a record low of 1.1986, which was reached in January 2017. As the pair's downward impulse exhaled, the probability of a corrective growth increased - from the bottom of the 20th figure. But the dollar was ahead of the event, weakening throughout the market. As a result, the GBP/USD pair retreated by almost 100 points only due to the devaluation of the greenback.

This price dynamics was due to several reasons. First, the ISM Manufacturing Index was published today, which, despite positive forecasts, dropped to 51.2 points, updating its multi-month lows. The structure of the indicator suggests that the employment component fell to 51.7 points (for comparison, it was at 54.7 in the previous month), and the price component of the index (inflation component) fell to 45.1 points, while the growth forecast to 50 -ty points. In general, the indicator has been falling for the fourth month in a row, disrupting the optimistic picture of the US statistical reporting.

After a strong Nonfarms and relatively good data on US GDP growth, today's release has become a kind of "cold shower" for dollar bulls. After all, the words of Jerome Powell are still fresh in their memory, as they allowed a further reduction in the interest rate, if key macroeconomic indicators show a steady decline. Yesterday, this rhetoric supported the dollar, as the key economic indicators that preceded the July Fed meeting came out (mostly) in the green zone or at the level of forecasts. But the ISM index "sobered up" many market participants, especially on the eve of tomorrow's Nonfarms, which traders could also be disappointed in, given the relatively weak report from ADP (according to their data, the increase in the number of employees amounted to 156,000 in July).

Amid doubts that have resurfaced regarding the Fed's future actions, the yield on 10-year Treasuries fell sharply. In just a few hours, this figure fell from 2,053% to 1,952%. The fact of such a rapid decline put additional pressure on the dollar, allowing bulls of the GBP/USD pair to return to the 21st figure.



In general, the current situation shows how dollar bulls are uncertain in their abilities. Only one macroeconomic report was able to shake the position of the greenback, which has been building up its muscles throughout the day. If subsequent releases will also be released in the "red zone" (especially inflation indicators), the dollar will return the points gained in the medium term, as concerns about the next steps from the Fed will return to the market.

This situation will allow GBP/USD traders to open short positions at the peak of corrective pullbacks. After all, the fundamental picture remains negative for the pound, regardless of the US events. Johnson is still preparing Britain for the hard Brexit, and his aggressive rhetoric addressed to Brussels reduces the likelihood of any compromise. The market hopes for the help of the British Parliament, which can block the implementation of the chaotic scenario. But these hopes are justified only with the current composition of the House of Commons. In the meantime, the British press is increasingly suggesting that Johnson will decide to hold extraordinary Parliamentary elections. Here it is worth noting that with the arrival of the new prime minister, the Conservative Party rating rose by six points at once - that is, to 31%. The Labor Party ranking is now 21%. The gap in the ratings of Conservatives and Laborers was a record in the last five months. Such sociology also has background pressure on the pound, although the question of early elections is not yet on the agenda.

Nevertheless, uncertainty over Brexit prospects, as well as Johnson's aggressive attacks on the EU leadership suggest that the downward dynamics of GBP/USD is still justified. From a technical point of view, the pair is within the framework of the downward movement, as evidenced by the trend indicators on all "higher" timeframes (from H4 and higher). The nearest support level is at 1,2005 (the bottom line of the Bollinger Bands indicator on the monthly chart). The purpose of a possible corrective pullback is the mark of 1.2290 (Tenkan-sen line on the daily chart): if the bulls overcome it, then they will consolidate again in the 23rd figure. However, given the fundamental picture, it will be difficult for the bulls to find a reason for such a significant upward spurt.

Analysis are provided byInstaForex.

EUR/USD. Useless Nonfarms: Trump made traders turn away from macroeconomic reports

Data on the growth of the US labor market could not support the dollar, which rather unexpectedly came under pressure from an external fundamental background. Another escalation of the trade war between the United States and China has mixed all the cards with dollar bulls. After all, at the end of the July Fed meeting, traders had the confidence that the regulator would limit itself to one round of rate cuts, as a precautionary measure. However, after the release of an extremely weak ISM index in the manufacturing sector, as well as after a resonant statement by Donald Trump, concerns about the Fed's next steps returned to the market.

Let me remind you that at the end of last week, the US president promised to introduce an additional 10 percent duty on imports of Chinese goods worth $300 billion starting on September 1, given that Beijing does not agree to conclude a deal with the United States before this deadline. If this scenario is implemented, additional tariffs will cover almost all imports from China. Trump was also outraged by the fact that China refused to comply with the agreements that were reached at the G-20 summit (we are talking about the resumption of purchases of agricultural goods). The fact that Washington, in fact, did not fulfill its part of the agreements (regarding the lifting of sanctions against Huawei), the head of the White House modestly kept silent.



Nevertheless, the fact remains: recent events suggest that the positive results of the G20 summit have been completely offset. The first round of negotiations after the summit was completed ahead of time and without any clear result, whereas a few days later, Trump announced the above ultimatum. Here, even without official comments, it becomes clear that the parties are still defending their positions, despite the formal desire to find a mutually beneficial compromise. Before the start of the negotiations, Trump suggested that the Chinese would deliberately pull time before the next presidential election in the United States (which will take place in November 2020), hoping for a change of power. The most likely candidates from the Democratic Party are really ahead of the current president - at least for today. Therefore, there is certainly some sense in Beijing's actions: why make a knowingly unprofitable deal with Trump, if in a year it will be possible to agree on other conditions with Biden? This is the reason for such haste in Donald's decisions - given the rating gap from the Democrats, he needs a victory in a trade war, the negative consequences of which are felt not only by China and the world economy, but also by the US economy.

Such prospects had a fairly strong pressure on the US currency. Traders again increased the likelihood of another round of rate cuts at one of the autumn meetings (most likely in September), while some analysts do not rule out more radical scenarios - either a one-time rate cut of 50 basis points or a third decline in December. of the year. Such an unexpected reversal of the plot allowed the EUR/USD pair to move away from the level of a multi-year low (1.1026) and demonstrate corrective growth to the level of 1.1117. In general, the dollar index in a few hours of Friday fell from 98.258 to 97.873. The yield on 10-year-old Treasuries has also declined significantly - the indicator has collapsed to almost a three-year low (1.843%).

The market clearly focused on geopolitical events, as it completely ignored one of the key macroeconomic indicators, Nonfarms. Although this release was supposed to support a further rally in the US currency: the US labor market continues to recover, demonstrating the growth of the main components. Thus, the number of people employed in the non-agricultural sector increased by 164,000 (which fully coincided with the forecast), while the unemployment rate remained at a record low of 3.7%. The number of people employed in the manufacturing sector of the economy increased by 16 thousand (a positive trend for the 2nd month in a row). The growth rate of the average hourly wage also pleased investors: in annual terms, the indicator rose to 3.2% (for the first time since April), and in monthly terms, the component rose to 0.3% (at this level, the indicator goes for the third month in a row). Thus, the July data completely offset concerns about the dynamics of growth in the US labor market, although this issue was on the agenda this spring, both among investors and members of the US regulator.



It is likely that after the release of Friday's data, EUR/USD bears would try to enter the ninth figure area or at least try to test a strong support level of 1.0980 (lower Kumo cloud boundary on the monthly chart) - but an unexpected move by the US president ruined the plans of the dollar bulls. When trading was about to close, the pair approached the first resistance level of 1.1120 (Tenkan-sen line on the daily chart), and if the growth of anti-risk sentiment continues, then the bulls will be able to develop further correction - up to the levels of 1.1190 and 1.1220 (middle line BB and Kijun-sen line on D1).

Here it is worth noting that on Friday, the Chinese Ministry of Commerce has already accused Donald Trump of violating the June agreement with Xi Jinping, promising to use "countermeasures". It is likely that this week we will find out what measures we are talking about. Strengthening the US-China conflict will put pressure on the dollar, since the escalation of trade war is seen by the market through the prism of prospects for further easing of the Fed's monetary policy.

Analysis are provided byInstaForex.

Control areas AUDUSD 08/06/19

The pair is trading within the medium-term bearish impulse today, therefore, the growth is corrective until the pair absorbs yesterday's movement. If the close of today's trading is below Monday's high, the downward momentum will continue. The probability of updating the weekly low is 70%.



Working within the medium-term trend frame always provides an opportunity to search for favorable prices in a prioritized direction, since before the reversal of the momentum, in most cases, there is a false breakout pattern.

Changing the direction of trade requires a breakdown of the main resistance of the WCZ 1/2 0.6823-0.6816 and the closure of today's US session above it. In this case, purchases will come to the fore, the goal of which will be the weekly zontrol zone of 0.6897-0.6884. It is important to understand that work in the upward direction remains corrective.



Daily CZ - daily control zone. The area formed by important data from the futures market, which change several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which change several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

Analysis are provided byInstaForex.

Forecast for USD / JPY pair on August 7, 2019

USD / JPY pair
The situation on the yen remains difficult. Thanks to yesterday's growth of the American stock market at S&P 500 by 1.30%, the pair was able to close the day with an increase of 52 points. On the daily chart, the price line was the balance line. Today, the Asian stock market is still falling in the Asian session, except for the Australian S&P/ASX200 index, adding 0.55%. Meanwhile, the Japanese Nikkei225 is now the leader of the fall with 0.83%. The yen "hid in a corner" almost literally as it is held in a triangle formed by the lines of falling and rising price channels. The Support is the line of 105.75 and the resistance is at 106.54. Fixation under the green bottom line will allow the price to decline to 105.00, which consolidates above the upper one that opens up the prospect of growth to 108.62.



On the four-hour chart, the signal line of the Marlin oscillator should go into the zone of positive numbers for the first sign of growth to appear. Visually, this will happen just with the release of prices above 106.54. The first growth target will be the MACD line at 107.42.



Analysis are provided byInstaForex.

EUR/USD: Trump's anger, Treasuries fall and RMB rise

After a temporary respite, the dollar again came under pressure from problems of a very diverse nature. Trump criticized the Federal Reserve again (and in a rather harsh form), the yuan renewed its 11-year high again, and the yield on 10-year Treasuries collapsed to three-year lows. The dollar index is actively losing its position amid such a negative fundamental picture, reflecting the greenback being sold throughout the market.

The euro-dollar pair also follows general trends. After dropping to the 11th figure during the European session, Bulls then more than made up for it, reaching 1.1240. By and large, today EUR/USD traders repeated the price path of Tuesday, however, with one exception: the US currency looks much more vulnerable today, and not only in conjunction with the euro. For example, paired with the yen, the greenback sank to the 105th figure (five-month low), and paired with the franc slumped to the 96th figure (11-month low). In other words, the market is actively getting rid of the dollar and investing in defensive assets - by the way, gold has risen to a 6-year high today, that is, to around 1509.



This dynamics is due to several reasons. First of all, the dollar was a victim of the general nervousness of traders. The unexpected move of the Reserve Bank of New Zealand (which suddenly dropped today by 50 bp immediately) unsettled many investors - it became completely clear that the central banks of the leading countries of the world will soften their monetary policy parameters in the foreseeable future, and the Fed is here will not be an exception.

Indeed, today, in addition to the RBNZ, the Central Bank of India has reduced the interest rate (by 35 basis points at once, to the lowest level since 2010) and the central bank of Thailand - the regulator has reduced the rate from 1.75% to 1.50%. The Thai central bank also surprised investors, as most analysts expected the rate to remain unchanged. Such a peculiar "domino effect" provided strong support for defensive instruments and equally strong downward pressure on the greenback. Wall Street reacted appropriately to the situation: the main indexes plummeted significantly when trading began. The Dow Jones Industrial Average fell by more than 2%, the S&P 500 by almost 2%, while the Nasdaq Composite by 1.6%.

The fundamental background for the dollar is too sharply painted in gloomy tones. Let me remind you that after the July meeting of the Fed (which took place just a week ago), the US currency went up sharply in almost all dollar pairs. Investors were confident that the Fed would limit itself to a "warning shot" in the form of one 25-point rate cut. By and large, Fed members, like Jerome Powell, indirectly confirmed this market assumption, although they did not exclude an alternative scenario. But a week ago, the likelihood of implementing this "alternative" scenario was minimal. However, further events unfolded with such swiftness that in just a few days dollar bulls lost ground.

Trump's resonant statement about 300 billion duties, China's response (refusal to purchase American agricultural products), devaluation of the renminbi, a 50-point reduction in the RBNZ rate and easing of the monetary policy of the central bank of India and Thailand are all links in one chain. With a high degree of probability, the Fed will also not be left out in the end, resorting to another round of rate cuts this year. The only question is - 25 or 50 basis points. It is noteworthy that yesterday James Bullard, one of the most prominent representatives of the "dovish" wing of the Fed, said that the regulator should not reflexively react to the actions of the US and China, which operate on the basis of the "tooth by tooth" principle. He noted that interest rates are now at an optimal level, and before deciding on further steps, the Federal Reserve needs to analyze the reaction of the US economy to a trade war.



But Donald Trump is still vomiting and mosquing, accusing the Federal Reserve of almost tampering. He said that Fed members still cannot admit their mistake, which was that the regulator began to "tighten monetary policy too soon and too quickly." In his opinion, the Federal Reserve should now actively reduce the interest rate, thereby increasing US competitiveness. "The problem is not even in China, but in our central bank," the president concluded.

On the one hand, Jerome Powell has repeatedly stated that such attacks from Trump does not affect the Fed's position. On the other hand, the market again started talking about the fact that the regulator could reduce the interest rate by 50 points in the fall (or resort to a double reduction of 25 bp by the end of the year) - even without taking into account the political pressure of the White House. This fact has a significant impact on the greenback, helping EUR/USD bulls to storm the nearest resistance level of 1.1260 (the lower border of the Kumo cloud on the daily chart).

But it is worth noting here that EUR/USD bulls still can't confirm their dominance - for this they need to gain a foothold over the above resistance level, and for fidelity - to overcome the upper border of the cloud, which corresponds to the level of 1.1302. Until then, the price will fluctuate in the range of 1,1140-1,1260 in anticipation of a powerful information driver that will help traders take the pair outside one of the corridor boundaries.

Analysis are provided byInstaForex.

Technical analysis of GBP/USD for 09/08/2019

Technical Market Overview:

The GBP/USD market is continuing the horizontal consolidation in a narrow range as it still does not have enough upward momentum to break through the lower trendline boundary located around the level of 1.2270. The momentum indicator remains neutral, which indicates a further possible spike towards the level of 1.1983. The trend is still down and there are no signs of a trend reversal yet, but the choppiness of the price action is still high, so there are no clear trading setups present on this market for now.

Weekly Pivot Points:

WR3 - 1.2595
WR2 - 1.2485
WR1 - 1.2298
Weekly Pivot - 1.2184
WS1 - 1.1983
WS2 - 1.1676
WS3 - 1.0876

Trading Recommendations:

The best strategy for the current market conditions is to follow the larger timeframe trend. The larger time frame trend is still down and there are no signs of trend reversal. The key long-term technical support at the level of 1.2420 has been violated and the next target for bears is seen at the level of 1.2100 and 1.1983. All the corrections are just the local correction inside of a downtrend.



*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Forecast for GBP/USD on August 13, 2019

GBP/USD
On Monday, the pound sterling slightly adjusted the top from strong technical support of the range of 1.1986-1.2032, corresponding to the lows of January 2017 and October 2016, and coinciding with the Fibonacci levels of the daily chart of 271.0% and 261.8%.



Convergence on the Marlin oscillator formed on the daily chart. Whether this pattern turns out to be a sign of a deeper correction, to the Fibonacci levels of 238.2%, at the price of 1.2154 or 223.6% at the price of 1.2230, or will it turn out to be a false signal and the price will consolidate at 1.1986, it will become clear either today after the release of data on employment in the UK or tomorrow, with the release of inflation indicators. According to today's data, the unemployment rate is expected to remain unchanged at 3.8%, applications for unemployment benefits in July may be slightly less than in the previous month - 32.0 thousand against 38.0 thousand. Inflation forecasts on Wednesday are negative, in particular CPI may drop from 2.0% y/y to 1.9% y/y.



On the four-hour chart, the price is steadily falling below the blue MACD indicator line, while the Marlin oscillator is in the decline zone. The current situation is neutral, we are waiting for the development of events.

Analysis are provided byInstaForex.

GBP/USD. UK wages up, but the pound is indifferent to statistics


The British currency received little support from macroeconomic reports today. Although the published data on the UK labor market was controversial, traders focused on the positive aspects of the release. This made it possible for the GBP/USD pair to move away from today's lows and develop a minimal, but still a correction.



But in general, the pair's situation has not changed: the pound is still under strong Brexit pressure, so any more or less large-scale price growth is perceived by the market as an occasion to open short positions. However, the lower limit of the range is very close - at the bottom of the 20th figure. To break through this level, traders need a more compelling reason, while the British are dominated by the usual market concern about the prospects of a "divorce proceedings". In other words, the pound/dollar is trapped in the grip of fundamental and technical factors. On the one hand, there is a strong support level of 1.2000, on the other hand, the lack of powerful information lines, against the background of general nervousness over the upcoming political battles in the House of Commons.

That is why today's release did not cause much excitement among market participants. Although this is partly due to the fact that the published figures are controversial. Thus, the unemployment rate unexpectedly rose to 3.9%, although according to general expectations, it should have remained at the same level - 3.8%. The number of applications for unemployment benefits has also increased significantly - by 28 thousand. Although it is worth noting here that according to the consensus forecast, this indicator should have shown a more deplorable result: +42000. Therefore, the real numbers in the end turned out to be much better than expected. But the wage component showed the strongest result. This indicator (excluding bonuses) jumped to an 11-year high (3.9%), confirming the positive trend in recent months. Total pay, which includes bonuses, also pleased investors with a growth of up to 3.7% (a three-year high).

It is worth recalling that the head of the Bank of England, Mark Carney, has repeatedly said that a possible increase in the rate will largely depend on the growth of wages, as this indicator spurs inflation. Of course, in the current environment, it all depends on Brexit's prospects, but if Parliament nevertheless blocks the "hard" scenario, then the likelihood of tightening monetary policy in the first half of next year cannot be ruled out. It is also worth noting that the pound paired with the dollar is now at its lowest values: the relative cheapness of the British currency will also play a role in accelerating inflation in the second half of the year.

Thus, the correction of the GBP/USD pair allows traders to open short positions with a larger price gap in the future. The target of the downward movement is still the 1,2005 mark - this is a psychologically important level of support, to overcome which a powerful information occasion is necessary. Nevertheless, the pound-dollar pair continues to be in a downward trend, so it is advisable to use the pair's growth for a more profitable sale of the British currency.



There is still no consensus among analysts whether the deputies of the House of Commons will be able to block the implementation of the hard Brexit scenario or not. Boris Johnson admitted yesterday that his main opponent, the leader of the Labour Party, Jeremy Corbyn, plans to drag out the country's exit from the European Union "for many years". Corbyn, in turn, does not hide the fact that he plans to initiate the issue of declaring a vote of no confidence in the prime minister. If the Conservatives cannot then form a government within 14 days, then the country will face early Parliamentary elections. True, Johnson may set the date for elections in November, that is, when the UK is already leaving the EU without any agreement.

Anticipating such a scenario, Johnson's opponents can prevent its implementation. There is another option, which, however, was used only a few times in modern history - for example, during the Second World War and the global economic crisis of the early 30s of the last century (that is, during the Great Depression). It is about creating a "government of national unity", which is formed by members of the temporary inter-party majority. According to analysts, at the moment this is a very unlikely option, but nevertheless, it cannot be ruled out. A politically mottled Parliament can at a critical moment rally and prevent the hard Brexit.

Thus, the outcome of the "Big Political Battle", as journalists have already dubbed the forthcoming confrontation between the prime minister and MPs, is far from a foregone conclusion. Therefore, the pair actually froze within the framework of the 20th figure, while maintaining a bearish potential. All this makes it possible for you to open short positions on the GBP/USD pair with corrective upward pullbacks while aiming for a downward goal in the price area of 1.2010

Analysis are provided byInstaForex.