11.12.201900:50 Forex Analysis & Reviews: Pound summersaults: outrageous volatility and Death Cross

This week promises the British currency with strong price fluctuations associated with the upcoming elections. Analysts estimate the pound as the most volatile instrument of the month, but after the end of the election in the UK its dynamics will return to a calmer course. The market is closely monitoring both the political background of the Great Britain and the sterling's balance.

Recall that this Thursday, December 12, early parliamentary elections will be held in the UK, which will decide the fate of the pound and determine the vector of movement of the country. According to recent polls, the Conservative Party, led by Prime Minister Boris Johnson, still has a significant advantage. Experts are certain that the victory of the ruling party will put an end to the three-year confrontation regarding the conditions for Britain to leave the European Union. The lion's share of the votes cast for the Conservative Party will help form a parliamentary majority. If this scenario is realized, the UK will be able to leave the euro bloc on January 31, 2020. If Labour won, the question with Brexit will remain open. Experts do not rule out a new referendum in this situation, as well as increased uncertainty in the country.

Nevertheless, many market participants believe in the victory of Conservatives. The positive mood is facilitated by the recovery dynamics of the British stock market and the national currency. A fly in the ointment can only be found when a Death Cross is formed in relation to the GBP/EUR pair. Experts do not exclude that in the next three months, sterling will rise in price by 2% against the euro. Recall that on Monday, December 9, the British currency in the GBP/EUR pair significantly strengthened, updating highs over the last 2.5 years. However, sterling later went negative. As a result, the Death Cross was formed. According to experts, this happened for the fourth time in ten years.

However, the main attention of analysts is focused on the current bullish rally of the GBP/USD pair, which may last up to the resistance level of 1.3370. Note that yesterday the British currency rose in relation to the greenback by 0.3%, to 1.3181. Over the current month, the pound strengthened by 3% against the greenback amid confidence in Johnson's victory in the upcoming elections.

The GBP/USD pair started at 1.3157 on Tuesday, December 10, showing a tendency to increase.

The pair increased after a while, near the levels of 1.3159–1.3161. Subsequently, the GBP/USD pair tried to get out of this range, but these efforts did not lead to anything. The pair then slumped to the next lows.

The GBP/USD pair traded at low positions, in the range of 1.3150–1.3151. At the same time, it seeks to get out of this range, however, these attempts have not yet been crowned with success.

Moreover, the GBP/USD pair went to an extraordinary depth, almost feeling the bottom. The pair has fallen to levels 1.3136-1.3138, and is now trying to recover.

The pound's position remains unstable this week, but is trying hard to stay afloat. The fluctuation of the British currency is demonstrated by various somersaults, which confuses the market. Experts believe that the sterling will be able to overcome the attraction of volatility by gathering strength before the start of the election campaign. Analysts count on its stability even in the event that election results are not that positive.