27.11.201900:39 Forex Analysis & Reviews: GBP/USD. November 26. Results of the day. The pre-election "swing" continues. The gap between Conservatives and Labour is reduced to 11%

4-hour timeframe

Amplitude of the last 5 days (high-low): 60p - 44p - 77p - 106p - 78p.

Average volatility over the past 5 days: 73p (average).

The GBP/USD currency pair continues to jump up and down, and these movements are not associated with macroeconomic publications, nor with Brexit news, nor with data from any party's election campaigns. On the first two topics, there was simply no news or message in the first two trading days of the week. On the third topic, all the news comes down to the publication of manifestos and interviews with their leaders. However, this did not stop the British pound from gaining 80 points yesterday, and today it got cheaper by 45. In the long run, flat movement remains inside the side channel with a width of about 200 points. But on the 4-hour timeframe, this movement does not look like a flat, but rather rather abrupt changes in the pair's course, with frequent reversals without a long-term trend. Thus, from its current position, the pound/dollar pair can rush in any direction, since its course is now not affected by fundamental data, political news, or election messages.

Meanwhile, while traders are openly waiting for parliamentary elections, according to recent sociological studies, the gap between Conservatives and Labour is narrowing and is currently no more than 11%. It is difficult to say why it is narrowing, since this moment is extremely important. If it is at the expense of the Conservatives' position, then this is bad for both Johnson's party and the prospects for Brexit. If due to weaker parties, the electorate of which goes over to the side of the Labour Party, then the balance of power between the two main parties does not change much. The main question is, how many seats will be allocated to Conservatives and deputies of other parties who will support Boris Johnson's deal on Brexit? If there are 51% of them in the Parliament, and even 49% of the seats will be taken by Labour and their allies, then Brexit will be approved by the majority of deputies, and in fact the difference in political ratings will not exceed 2%. This is just the case when every vote counts, every seat in Parliament will be worth its weight in gold. Experts note that the risk of forming a "suspended Parliament" is very high. The Conservatives will certainly win, but their representation in Parliament will not be enough to support the agreement of Boris Johnson. In this case, Brexit may remain in limbo for a few more years, or the matter will still come to a second referendum.

In addition, more and more experts doubt that the government of Boris Johnson will be able to conclude a trade agreement with the European Union in 2020. Earlier, the British prime minister had already promised that he would leave the EU before October 31, and did not keep his word. Now, according to political experts, he will not be able to agree with the European Union until the end of the transition period, which applies to the whole of 2020. According to Ivan Rogers, a former British ambassador to the EU, "the farther the UK is from the EU, the more time negotiations on a trade agreement will take." Rogers also believes that by the end of 2020 you can only have time to conclude a "superficial, cheap agreement, and even that is unlikely." Rogers also predicted the "biggest crisis in the Brexit situation" next year. We, in turn, recall that the current prime minister still has 0 victories. The first may be a convincing election victory, and the second - the withdrawal of Britain from the EU. But if there is no first victory, then the second will not take place.

Important macroeconomic publications from the UK are not expected this week, so the pound/dollar pair is likely to remain inside a wide side channel. At the moment, we have a downward trend within this channel, therefore, we have the right to expect a decrease to the level of 1.2790.

Trading recommendations:

GBP/USD resumed its downward movement as part of a sideways trend. Thus, traders are again encouraged to consider the sale of the pound with targets at 1.2826 and 1.2790, as pound quotes rebounded from the critical Kijun-sen line. It is not recommended to buy the pound/dollar pair yet, as fundamental factors take the side of a downward trend, and bulls are not able to consolidate the pair above 1.2980.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movement options:

Red and green arrows.