Predictably, the pound sterling fell?

On Monday, the unexpected news came to the markets about the resignation of British Foreign Secretary B. Johnson. Against this background, the rate of the British currency at the moment collapsed in relation to all major currencies. Against the US dollar, he collapsed by one hundred and sixty points.

The news of the resignation of the British foreign minister stirred up the currency market and exerted a strong pressure on the sterling rate, which after some recovery on Monday evening resumed the downward trend on Tuesday. Against the backdrop of all these events, the question arises: did not this decline become natural?

We earlier at the beginning of this year expressed doubts that the UK and the EU will, as they say, amicably break up. On the one hand, the EU pressure in the face of Germany, which wanted to punish Britain, so that other members of the union did not have the desire to do the same, and on the other - the internal contradictions in the elite on the "foggy Albion" did not allow to solve this problem. Given this reality, we believe that the government crisis in London reaches the point of the highest boil. It is likely that the resignation of the odious Johnson is not over.

It is likely that the new resignations or grinders of some members of the Cabinet will shake the British government and have a strong negative impact on the exchange rate of the national currency. We expect that in the current situation sterling will be extremely sensitive to this, which means that we can witness its new collapse. In our opinion, yesterday's collapse of the British currency was predictable, but the question was when it would happen.

In this situation, it seems, "unsweetened" will be a single European currency, which has recently added to the wave of positive economic data from the eurozone and especially Germany. The pressure of the unsettled situation around the exit of Britain from the EU will implicitly put pressure on the euro, which means that it can be assumed that focusing investors again on the problem of trade wars can again reduce investor demand for risky assets, and in this situation the euro will once again experience growth difficulties against the dollar The US and its decline will only be strengthened by Brexit's problem. In any case, yesterday's news about the resignation of Johnson is vividly demonstrated.

Assessing this state of affairs, we can say that both the euro against the dollar and the sterling against it will be sold off on growth, generally remaining in the short term in the current "outset".

Forecast of the day:

The EUR / USD is trading above the 1.1725 level. A fall below this level could be the reason for the price decline to 1.1690, and then to 1.1660.

The GBP / USD is trading at 1.3285. The couple is trying to recover from yesterday's collapse. We consider it necessary to sell it on growth from the level of 1.3285 with a probable target of 1.3150.analytics5b445fab46a3c.png


The material has been provided by InstaForex Company -