The Unbothered Pound

Fundamental breakdown

Prime Minister Boris Johnson has been under-pressure to resign by his own Conservative party colleagues following an apology before Parliament regarding the Christmas party he attended whilst the whole of UK was under lockdown. A vote of confidence on the Prime Minister would require the support of 54 Tories.

The pound does not seem to have any negative implications based on this political noise and we may continue to see this although there is a chance the UK may have a new Prime Minister, most chances Rishi Sunak, who is currently UK’s Chancellor.

The only chance to see a negative UK would be depending on how today’s meeting between UK Foreign Secretary and EU officials is concluding the unresolved dispute on Northern Ireland. EU has already indicated that a suspension of the NI protocol would prompt a trade retaliation.

On Bank of England, the market is currently determining an 85% probability of a 0.25% rate hike at the February meeting.

Technical Analysis

GBPUSD

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After a strong Impulse wave that we experienced GBPUSD, majority of 2021 was a correction of 2020’s midst pandemic-based move. 2021, formed a descending channel which the price highly respected as this formed the corrective wave’s parameters, however this has now been broken out of aggressively. The next key level we are aiming to breach would be 1.382 which would confirm a continuation of 2020’s bullish trend.

EURGBP

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Euro-pound seems to be going sideways after a strong impulse we witnessed in the previous decade. However, this seems to be a correction on higher timeframe of that impulse wave. We may be coming to an end of that correction as seen on this weekly timeframe, but the question is at what price will EURGBP bottom out. Should it break the grey highlighted (0.83) key support, we can expect the price to depreciate into 0.80 which would act as next support.