21.02.201814:51 Forex Analysis & Reviews: Global macro overview for 21/02/2018

The British Pound is starting to get more attention under the pressure of Brexit information noise. Recently, the British currency gained through the article in Business Insider that the European Parliament is considering leaving Great Britain access to the single European market. The UK Parliament is to prepare a resolution allowing more flexibility in the negotiations, but analysts recommend a reduction in enthusiasm. First of all, each EP project must be approved by the European Council and all 27 EU members, so nothing is certain. Secondly, even the best indirect solution cannot be better than EU membership, so more stringent conditions for such an agreement should be expected. And that certainly would not appeal to the biggest supporters of Brexit in the British Parliament. Their determination is confirmed by Prime Minister Theresa May's "ransom demand" from 62 members of the conservative party with a list of postulates in Brexit (including regaining control over legislation and trade). The number of signatories has an additional meaning here, because the same number of votes is needed to submit a vote of no confidence in the government). If Prime Minister May gets scared and adjusts to demands for maintaining power in the country, it will also mean stirring up the conflict in negotiations with Brussels. Tomorrow meets the so-called The "War Council" of the British government, so we can count on leaks regarding potential compromises (or their absence).

In the meantime, GBP will focus on the report from the UK labor market. Signs of acceleration in wage dynamics will strengthen expectations for an earlier BoE interest rate hike, helping the currency strengthen its position to the other currencies across the board.

Let's now take a look at the GBP/USD technical picture in the H4 time frame. The market has hit the golden trendline two times already, but so far no avail. The price keeps returning to the consolidation zone as the local highs are getting lower. If the market will start to make more lower lows, then this will be a good justification for a local downtrend to continue towards the level of 1.3760 and 1.3691. The nearest support is seen at the level of 1.3921 and the resistance is seen at the level of 1.3986.