Brexit in a week from 4/11 – 10/11/2019

After the dissolution of the British Parliament, the campaign for early elections has officially begun. Thus, the euphoria observed by the markets three weeks ago was replaced by further uncertainty, and this resulted in a slight depreciation of the sterling pound. What we can expect this week is presented below.

Fundamental analysis

The dissolution of the British Parliament on November 6, 2019 means that until the elections and the announcement of the results, there will be no major political decisions in the UK on Brexit. From this perspective, the immediate risk of surprising Brexit news is currently lower. However, the situation may change strongly as the election deadline of 12/12/2019 approaches and the voting preferences of the parties evolve.
Attention is now focused on economic data. Thursday's meeting of the Bank of England left the interest rate unchanged at 0.75%. In addition, PMI data in construction and PMI in services were reported and both were better than analysts had expected.
The US  reported data on PMI in services (so-called ISM non manufacturing PMI), which were also better than expected when it reached 54.7 compared to the previous 52.6. The most important has been fundamental information on the status of negotiations in the China-US trade war. On Thursday it seemed that both sides wanted to cancel tariffs, but on Friday the US president announced that he will not cancel them.

Technical analysis as at November 10, 2019

The GBPUSD currency pair ranged from 1.2769 to 1.2943 last week. Consolidation continues after previous strong growth.

Figure 1: The GBPUSD on weekly chart

On the daily chart, see Figure 2, we can see that a higher high and a higher low were created, as well as the bullish cross of the EMA 50 (orange line) above the SMA 100 (blue line) at point D, which also confirms the upward trend.
However,  last week the GBPUSD closed at a lower price every day until it reached the nearest support, which had already been tested once.

Figure 2: The GBPUSD on daily chart

We can also see that the price has broken through the top of the growing channel and it is now below it. One scenario for this week is that the price will move in the range between support 1 and resistance 1. The second option is that the support 1 will be broken and then the price could reach a level around 1.2550 - 1.2650.

Resistance 1 is at a level of about 1.3000 - 1.3050. From Figure 1, it is a level of about 78.6% of Fibonacci retracement and it is also the area from which the previous significant downtrend was triggered. At the same time, the price at this level stopped on October 21, 2019 and points E and F here form a reverse formation double top.
Resistance 2 is at a level around 1.3150 - 1.3200.
Resistance 3 is approximately 1.3300 - 1.3370.

Support 1 is now in zone 1.2740-1.2780 and the price is currently testing this level for the second time.
Support 2 is in the range around 1.2550 - 1.2600. This level is the confluence of the 50% Fibonacci level of Figure 2 and the break of previous resistance. Reactions may also occur at 1.2500, where 61.8%  Fibonacci retracement is. This level seems suitable for long speculation.
Support 3 is at 1.2350-1.2400, where the Fibonacci level 78.6% is, see Figure 2.

What awaits us this week?

Although no major Brexit events await us, this week will be very busy for the British pound in macroeconomic terms, as GDP data for Q3, industrial output, retail sales, CPI (inflation) and employment data will be reported.

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