The British currency is already reeling the second day – the GBP/USD pair either descends into the area of the 28th figure, then rises to the borders of the 30th level. A similar situation is observed in other cross-pairs involving the pound.
The "boiling point " in the subject of Brexit is very close, and the bill is already going on not just for days, but for hours. According to one version, Brussels agreed to wait only until Wednesday evening – that is, tomorrow. If Theresa May does not agree with the members of the government on a draft agreement with Europe, then the November summit of the EU countries will not take place, and this question will again hang in the air until December. And since the parties still need to agree on a future deal at the legislative level, there is very little time left, and, consequently, the probability of a "hard" Brexit is growing.
However, rumors about the so-called "deadlines" were present before, but later they did not find its confirmation. In general, the information hype around Brexit is gaining momentum every day, however, newspaper headlines are increasingly found in interrogative form. If you narrow the entire information flow as much as possible, the message of all news is the opposite in its essence: "agreed" or "not agreed". The context of these words is already clear to many without additional explanations - for a long period, the parties cannot agree on the infamous 5% that separates the negotiators from concluding a full-fledged deal.
The algorithm of "information ping-pong" this week is built as follows: there is an encouraging message about the alleged agreements reached between London and Brussels in the press or in social networks. After some time, one of the officials of Britain or the EU refutes the rumors - as a rule, adding that the negotiation process is still underway. Due to such an ambiguous information background, the GBP/USD pair demonstrates impulsive jumps: yesterday the pair updated its high of the day in just a few minutes (on Barnier's reports that the deal is likely to be concluded soon), but then returned back to the 28th figure (after London refuted Barnier's words). The pair has been trading in this manner for the second day.
Obviously, in the conditions of such informational noise, it is unrewarding to predict the price direction: for example, a few hours ago the GBP/USD pair was treading at the level of yesterday's close, but now the price has sharply jerked up. The market again received encouraging information that the British Cabinet may agree on a deal tomorrow at its emergency meeting. Earlier this meeting was planned to be held on Monday, but then it was postponed for today, and then subsequently canceled.
Also, one of the British journalists said that in recent hours, "significant progress has been made on key issues", and now the parties have to resolve only minor nuances. As you can see, the market reacts to absolutely unverified information, despite the fact that such messages have been repeatedly refuted. Nevertheless, positive signals are enthusiastically picked up by traders, and the pound is rapidly gaining momentum. It is possible that by the end of the day the GBP/USD bears will be able to update the low of the day - if, for example, the prime minister or any of her assistants refute the intentions voiced by journalists.
Theresa May herself said yesterday that the negotiation process with Brussels has entered the stage of "endgame". The endgame is the final part of a chess or checkers game, so this term sounds with a special subtext in the mouth of the prime minister. The fact that its plan to exit the country from the EU was called Chequers (that is, "checkers"), after the same name of the country residence. According to some experts, May thus hinted that the played game ends in accordance with the main points of the premiere scenario, contrary to the protests of many British politicians. Whether this is so - we will know within the next day, when the key meeting of the government is set to take place.
Thus, analyzing the situation on the pound/dollar pair, it is quite difficult to separate the "wheat from the chaff": the information flow is too saturated and too contradictory. If we proceed only from the facts, we can say that at the moment the transaction has not yet been concluded and not agreed. Everything else is a rumor. Therefore, at any moment the pair can turn around and demonstrate a "mirror" downward impulse, returning to the opening level. As the practice of recent days shows, GBP/USD traders are compliant with loud headlines and disappointing comments from top politicians.
But if the members of the British government really agree on the draft agreement tomorrow, the GBP/USD pair will not only return to the framework of the 30th figure, but also update the September high in the area of the 33rd figure.
The material has been provided by InstaForex Company - www.instaforex.com