The pound sterling: will the UK have time to negotiate with the EU?

The British pound sterling was trading up against the US dollar on Monday, August 17. In the medium term, the British currency is clearly "stuck" in a sideways range, and in addition to technical reasons for that there are also fundamental ones. For example, concerning the nuances of Brexit. The negotiations with the EU are not energetic enough, and there are big doubts that it will be possible to discuss the borders and taxes before the end of the transition period.

Or, for example, statistics. This week the UK is preparing to release a block of statistical data on the consumer price index and retail sales. In both cases, the market expects deterioration, and if so, the pressure on the Bank of England's position will increase further.

Or, say, tourism. The industry received a new blow after London imposed a mandatory two-week quarantine for most people entering the country. The initiative affected those coming from France, as well as Malta and the Netherlands. For the British economy this will bring losses, which means it's bad news for the pound as well. All the stability of GBP we have seen lately is based solely on the weakness of the dollar - the British currency has no internal support factors at all.

Technical picture of GBP/USD

On the H4 chart GBP/USD currency pair trades in a wide consolidation range around the level of 1.3070. The main scenario we consider the growth and renewal of the level 1.3150. And with its breakdown upwards the potential for growth to 1.3222 will open. Technically, this scenario is confirmed by the MACD oscillator. Its signal line has broken through the zero level upwards, which suggests further growth development.

On the H1 chart GBP/USD currency pair is trading in another wave of decline. Today the level of 1.3072 is expected to be reached. After that, we will consider the probability of growth on a break up to 1.3105. After that growth to the level of 1.3150 with the prospect of growth to 1.3222 is possible. Technically, this scenario is also confirmed by the Stochastic oscillator, the signal line of which trades strictly downward to the level of 20. After a rebound from it upwards, the correction will be considered as completed. The growth to the level of 80 is on the way.