09.12.202015:44 Forex Analysis & Reviews: GBPUSD: speculation continues, watch the information flow

The pound sterling looked rather calm last day in comparison with insane Monday, but still, local activity occurred in the market, as indicated by a candle of 100 points.

Speculative activity, as before, arose on the flow of information noise from Brexit, where, as it were, there was nothing to grab at, except for small comments by British Prime Minister Boris Johnson for media correspondents. Little has been said, Johnson still wants and hopes for a trade deal, but warned that it might be time to accept the failure of the negotiations. The exact date of the meeting of the Prime Minister with the head of the European Commission was also announced to take place on December 9.

The time when the news appeared coincides with the impulse jumps of the previous day, in particular, the sharp price change at 15:15 * (time by the trading terminal *).

In general terms, the dynamics were moderate, but the speculators expected something more from the information flow, probably specifics.

In terms of technical analysis, the price spikes passed within the 1.3300 / 1.3400 range, which ended the trading day. In fact, if it were not for the dynamic opening of the American session, price fluctuations would acquire distinct forms of accumulation, as happened with the EUR/USD currency pair.

Examining the trading chart on a daily scale, one can see that due to equidirectional speculative interest, the signs of correction were replaced by fluctuations in the quotes at the local peak of the medium-term upward trend.

Today, in terms of the economic calendar, we do not have significant statistics for the UK, and for the United States, only data on open vacancies will be published, the number of which may decline.

The main instrument of speculators is still the information flow on Brexit.

British Prime Minister Boris Johnson went to Brussels to meet with the head of the European Commission, Ursula von der Leyen, where he is trying to bring the previously interrupted negotiations out of the deadlock.

Irish Deputy Prime Minister Leo Varadkar said Boris Johnson is likely to make concessions as the level playing field continues to hamper efforts to reach a trade deal.

"I think he wants Britain to be part of the world, and the prime minister is very strong on the issue of sovereignty. It will be a circle that is difficult to align, the chances of a deal are 50-50," Varadkar said in an interview with RTE TV company.

For the European Union, business rules and a level playing field are the keys to any deal. France has repeatedly insisted on this, and on Wednesday (December 9), German Chancellor Angela Merkel expressed a similar opinion.

"We must have equal conditions not only for today but also for tomorrow and the day after tomorrow. To do this, we need an agreement on how one side will react if the other changes its terms," said Merkel

In a tweet, RTE journalist Tony Connelly is actively working towards Brexit, reporting that the European Union and the UK have agreed on a trusted trade scheme that would mean tariff exemption for up to 98% of goods moved between the UK and Northern Ireland.

2% can take advantage of discounts on any tariffs.

Tariffs will only apply if a free trade agreement is not concluded between the EU and the UK.

The news is good, it inspires speculators to buy, but this may still change.

Boris Johnson, following comments from the German Chancellor, ruled out an agreement on existing EU fishing proposals and ensuring and enforcing fair competition rules.

"Our friends in the EU now insist that if they pass a new law in the future, which we do not obey or do not follow, it will automatically be regarded as a violation of the law and will be punished. They say that we should be the only country in the world that does not have sovereign control over its fishing waters. I do not think that these are conditions that any prime minister of this country must accept," said Johnson.

In fact, Johnson's comment may exert local pressure on long positions due to the negative and dead-end results of the upcoming meeting.

If Johnson and von der Leyen's negotiations go well, negotiators could return to discussing the details of the deal within a few hours. If all goes wrong, officials on both sides fear a tough Brexit scenario.

Analyzing the current trading chart, one can see a rapid upward movement, which led to the price breaking out of the 1.3300 / 1.3400 range. The nature of the movement is speculative, caused by the positive emotions of Johnson's trip to Brussels. In simple terms, speculators are hoping for concessions that can defuse a gloomy negotiating climate.

Market participants carefully monitor the flow of information related to Brexit, as any news, rumor, or comments can lead to another surge in activity.

As mentioned in the previous review, technical analysis with such a rich information background and speculative activity can work with strong interruptions. Therefore, traders were advised to actively monitor the information space in order to identify burning news on trade negotiations.

The tactics of working with information remained the same, positive news on trade negotiations leads to a strengthening of the pound sterling, negative news leads to a weakening of the British currency.

Information can be retrieved both from our website - analytics section, as well as directly from the media, for example - Bloomberg, Wall Street Journal, Reuters.

Indicator analysis

Analyzing different sectors of time frames (TF), it can be seen that the indicators of technical instruments signal a buy due to a rapid upward movement in the first half of the day. When the market is so oversaturated with speculation and follows the information noise, the indicators can be volatile.

Weekly volatility / Volatility measurement: Month; Quarter; Year

Measurement of volatility reflects the average daily fluctuation, calculated per Month / Quarter / Year.

(December 9 was built taking into account the time of publication of the article)

The dynamics of the current time is 111 points, which is practically the volume of the average daily indicator. The acceleration may continue further as Brexit information becomes available.

Key levels

Resistance zones: 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support zones: 1.3400 *; 1.3300 **; 1.3175 (1.3200); 1.3000 ***; 1.2840 / 1.2860 / 1.2885; 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957).

* Periodic level

** Range level

*** Psychological level