10.10.201911:11 Forex Analysis & Reviews: Trading strategy for GBP/USD on October 10th. The pound is extremely weak without information support

GBP/USD – 4H.

As seen on the 4-hour chart, the GBP/USD pair performed a reversal in favor of the pound and began the process of returning to the correctional level of 23.6% (1.2293), around which it continues to spin for several days. The growth can be explained by the formation of a bullish divergence in the MACD indicator. The divergence is not very strong, but it is still there. At the same time, the growth of quotations is weak, as Brexit continues to dominate the pound. As much as I would like to put Brexit aside and draw the attention of traders to a different background information, but nothing happens, because it is Brexit that remains the number one topic for all traders. And it is Brexit that most affects the movement of the pound/dollar pair. A new rebound of the pair from the Fibo level of 23.6% will work again in favor of the US dollar and the resumption of the fall towards the level of 1.2014.

A brief digest of the latest Brexit news. Each individual news is not important, but all together they add up to the background information that stops traders from buying "Briton". The European Union said that it would be extremely difficult to reach an agreement and was sceptical of all of Boris Johnson's proposals, saying that they did not provide a solution to those problems because of which the deal has not yet been agreed. The EU also said that it still considers the version of the agreement reached last November with Theresa May – the best option. Boris Johnson, in turn, did not give an interview in the last days. The parliament is preparing for the results of the summit on October 17-18, although why prepare for them if there is no agreement with Brussels with a 95% probability. We need to prepare for a possible violation of British law by Boris Johnson, if the Prime Minister does not ask for a delay from the European Union. The Alliance has also said it is ready to grant a new reprieve if London makes such a request officially. That is, Boris Johnson should address officially. But Johnson has not yet addressed, moreover, continues to stand by his position – "There will be no postponement of Brexit." Thus, the main intrigue lies in the Prime Minister of the Kingdom – will he commit a criminal offense by violating the law requiring an agreement with the EU or transfer Brexit?

Economic reports from the UK may have a slight impact on the pound/dollar pair. GDP in August fell by 0.1% m/m, and industrial production lost just 0.6% m/m and 1.8% y/y. It is strange that with such reports, the pound has not yet gone to conquer new lows. Perhaps this situation will be corrected after lunch, when the report on inflation in America will be released.

What to expect from the pound/dollar currency pair today?

The pound/dollar pair aimed to return to the correction level of 23.6% (1.2293) again. The general information background, in my opinion, remains negative for the "Briton". The local background is also negative, economic reports from the UK are very weak. Thus, I expect the pair to resume falling, unless the US inflation report shows a slowdown in September.

The Fibo grid is based on the extremes of March 13, 2019, and September 3, 2019.

Forecast for GBP/USD and trading recommendations:

I do not recommend buying a pair in the near future, as the information background is now difficult to call positive for the pound.

I recommend to consider new sales of the pair with the target of 1.2014 if the rebound from the correction level of 23.6% is performed, with the stop-loss order above the level of 1.2308 or when the bullish divergence is fixed under the low.