On Tuesday, the British Pound continues strengthening against the USD. The Pound has always been very sensitive to political news and this time it “suited the buyers’ taste”.
By now, it is already known that the British Prime Minister, Theresa May, managed to make arrangement with other members of the country’s Cabinet of Minister about the increase of payouts amount to the European Union within the framework of the Brexit procedure. The numbers are impressive: initially, it was 22.5 billion Euros, and now it’s 405 billion Euros. May was able to earn support from two ministers, who are rather “troubled” when it comes to the Brexit, Boris Johnson, the Secretary of State for Foreign and Commonwealth Affairs, and Michael Gove, the Secretary of State for Environment, Food and Rural Affairs. However, they also set their conditions, which seem to be rather reasonable in terms of the British political and financial order. But it is highly questionable whether the European Union will accept May’s position, because everyone knows that the main goal of the alliance is to receive from the United Kingdom as much as possible.
What is this money for? Since the United Kingdom is going to exit the EU, this money is a fine London will have to pay for its failure to perform obligations towards the alliance. And it’s obvious that the EU is intentionally dragging out the negotiations in order to get more money. However, May hasn’t got time on her hands, that’s why she is trying to resolve this thorny issue differently.
If the European Union resumes negotiations and stops slowing down them deliberately, we may admit that May won this time. She beat both her own British “euro skeptics” and conservatives from the EU.
This is good for the British Pound, which reflects all details and nuances of the Brexit negotiations.
The mid-term technical picture of the GBP/USD pair is still showing that the price is consolidating not far from the upside border of the Flat pattern. The best way to see the current situation is the H1 chart, where the pair completed a long uptrend and started testing the support level. If the level is broken, the price may fall and reach 1.3158. However, if this movement is really just a sight test, the price may continue growing towards the upside border of the above-mentioned pattern at 1.3302. The local resistance for the rising impulse may be the area near 1.3258.
Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
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Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
