16.10.201910:25 Forex Analysis & Reviews: Contradictory pound: "Zebra" rises and falls

The current fall was very restless for the British currency. The dynamics of the pound was quite contradictory: rises alternated with falls, and this continues to this day. Experts are at a loss with forecasts regarding the "Briton," since political events related to Brexit play a leading role in this matter.

The position of the British currency can be described as a series of successes and failures. The dynamics of sterling resembles a "zebra", where the black stripe is replaced by white, and vice versa. An example of this is the sharp rise in the pound against the US dollar on Tuesday, October 15. Yesterday, the pound showed a maximum since the end of May 2019, reaching 1.2800. At that moment, a white streak came for the pound, and it was supported by positive news that the UK and the EU are close to reaching an agreement on Brexit.

Negotiations on this issue do not lose their sharpness and are still ongoing. Experts believe that the agreed text of the document on leaving the EU will be presented today. It can be recalled that earlier, the UK and the Euro bloc countries were able to form an agreement on Brexit, however, the deal was disrupted by the British Parliament since the department did not agree with the text of the previous agreement. Thus, it remains to hope that the current Prime Minister Boris Johnson will be able to enlist the support of Parliament and the current agreement will be approved. However, much in this matter depends on support from the Democratic Union Party of Northern Ireland, analysts emphasize.

At the same time, oil to the fire is added to the pre-election debate taking place in the arena of Misty Albion. Many market participants fear the victory of the British Labor Party under the leadership of Jeremy Corbyn. This position is shared by a number of experts, believing that the victory of J. Corbyn will be a defeat for the pound.

After several days of political debate, the British currency exceeded 1.2700. The pound rose in the wake of positive, as the market had hoped that the UK would be able to negotiate with the EU on leaving the Euro bloc. However, this did not happen. Negative "British" added pessimistic comments by Michel Barnier, EU chief negotiator. In addition, the pound retreated from the highs, losing ground, and then stubbornly restored them. At the moment, the British currency is celebrating a small, but victory, having won a place at the top. The pound is trading at 1.2739–1.2744.

In the morning, the GBP / USD pair reached 1.2775–1.2776. At the moment, the pair declined to 1.2687, and then rose again.

Many currency strategists believe that despite the potential damage to the UK business and economy in the long run, the victory of the Labor government will affect the pound less negatively than Brexit without a deal. Experts are sure that the country's exit from the EU without a deal is a greater evil for the British currency than the Labor government. Now, concerns of investors about the Labor Party are linked to the fact that if it wins the election, British government bonds could be under attack. However, many analysts are confident that fears associated with both negative scenarios - falling bonds during Labor or collapse of the pound in case of Brexit without a deal - may be unnecessary. Some of them adhere to the position "the devil is not so terrible as they paint him", considering the above problems not too large.

The current position of the "British" is such that in any situation, with any government, it will have a hard time. In the current situation, it is likely to expect a black bar, experts say. It can end quickly and turn into positive, or it can lower the pound to lows for a long time. In any case, the pound will need stamina ahead of Brexit, experts summarize.