FX.co ★ GBP/USD. December 23. Paradoxical Prime Minister, paradoxical Brexit

GBP/USD - 4H.

On December 23, the GBP/USD pair performed a consolidation under the Fibo level of 76.4% (1.3044) and continues to work in the range just below this level. Thus, the process of falling quotes of the pair can be resumed at any time, as traders failed to gain a foothold above the correction level. Thus, it is not recommended to count on the growth of the British pound before the closing of the pair above the Fibo level of 76.4%. There is no indicator of emerging divergences today, and the information background is now the main factor in the fall of the British currency.

In the UK, third-quarter GDP was released on Friday, and for all the visible positives (higher gains than traders expected), I still can't say that the UK economy is "getting off its knees." The negative impact of the three-year series called "Brexit" will continue, as the UK since the 2016 referendum is the most paradoxical country with an equally paradoxical government, which, moreover, is also quite often changing. Let's go through the main points that only add uncertainty to the overall picture of things and that can cause a strong drop in demand for the pound in the future:

In recent months, the government still wanted to complete Brexit (consider the period after Boris Johnson came to power). The new prime minister immediately indicated a desire to leave the EU without an agreement and immediately came under a barrage of criticism with parliament rejecting his no-deal Brexit proposal three times. Johnson made concessions, negotiated a deal with Brussels that many experts said was even worse than Theresa May's deal, which parliament also rejected three times. Boris Johnson's new agreement was also rejected by most deputies. As a result, new elections, a new parliament, which miraculously approves the deal of Boris Johnson, which had been rejected three times before, and Boris Johnson himself immediately declares that the transition period will not be extended, which means a very short time for any negotiations with the European Union just on those agreements that make it possible to call Boris Johnson's Brexit with deal. That is, if there are no agreements, then Brexit can be called no deal, and, accordingly, we have come to what Boris Johnson's rule began with. The Prime Minister, of course, said that he would make every effort to prevent a no-deal Brexit, but most traders and experts are already well aware that Boris Johnson does not always keep promises and at the same time he does not disdain from various not quite honest techniques to achieve goals. Many experts point out that in about a year, it is impossible to agree on such a huge agreement, which will determine the relationship between London and Brussels for many years and decades. Thus, now there is nothing to prevent Johnson from openly blackmailing the European Union with an exit without agreements. If the EU does not make concessions, then Brexit will be a no-deal, which Johnson does not fear and which will deal a crushing blow to the country's economy. Demand for the pound, in this case, will fall to the level of "below the plinth".

Forecast for GBP/USD and trading recommendations:

The pound-dollar pair is trying to continue the process of falling and only in the case of consolidation above the correction level of 76.4% can take a pause for a while and roll back up a little. However, I do not expect a strong upward pullback, and the current location of the price relative to the level of 76.4% allows selling the pound-dollar pair with a target of 1.2836. I do not recommend buying a "Briton" soon.

The Fibo grid is based on the extremes of March 13, 2019, and September 3, 2019.