Pound Unable to Go up

The pound sterling has been trying to strengthen over the last few days but has not succeeded so far. The major fear of the pound traders lies in Brexit negotiations which are paused or disputed every now and then. Besides, the market has not yet fully recovered after Donald Trump’s speech, where he said that too mild Brexit may damage the relations between the UK and the US.

Now, investors’ attention is driven to the fundamentals. Today’s job market data were quite neutral, so the pound is still uncertain and waiting for more news to come.

Jobless claims in the UK rose by 7,800 against the expectations at 2,300 and the previous number of 7,700. It looks like this summer is not the best season for British business, which is quite a strange thing. Meanwhile, the unemployment rate remained unchanged at 4.2$, quite in line with the expectations, while the average wages per three months rose by 2.5%, also meeting the expectations.

Thus, the fundamentals are just okay, without being able to act as a driver. At the same time, investors watch the Brexit closely, and all those news are rather fearsome or just negative. The UK has about 6 months left to arrive to an agreement with the EU; after March 2019, the transitional period will start, and while May and her advocates want it mild, some criticize this approach. Nobody knows what will happen next, and this is what the pound traders are scared of.

Technically, GBPUSD is uptrending, perhaps this is a reversal after a long fall. After breaking out the latest descending channel, the price formed an initial ascending channel. Then, the price hit the new channel’s support and went down to the projection channel, but there it failed to make a new low, just testing the broken out resistance area. Currently, there’s an ascending impulse forming inside a wide uptrend channel, with the support at 1.3110. The target could be at the major channel resistance, which is $1.3420.

GBP/USD 4H Chart
GBP/USD 4H Chart

This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex