18.10.201911:39 Forex Analysis & Reviews: Trading strategy for GBP/USD on October 18th. A meaningless agreement between Johnson and Juncker on Brexit

GBP/USD – 4H.

As seen on the 4-hour chart, the GBP/USD pair performed a consolidation above the correction level of 61.8% (1.2836). Thus, today traders have the right to expect continued growth of quotations in the direction of the next correction level of 76.4% (1.3044). However, the informational background makes us wonder more and more whether the pound will fall already on Monday? It is the information background, which will be discussed a little below, that can put everything in its place since the insane growth of the British currency in the last week still looks strange.

What would be the movement of the pound/dollar currency pair if traders did not try to predict the outcome of negotiations at the EU summit? Probably not. That is, the GBP/USD pair would remain where it began its ascent of the last week, near the level of 1.2200. Even taking into account the fact that Juncker and Johnson have agreed, it can even be said that the governments of the EU and Great Britain have agreed, the pound should not have grown significantly since this does not matter until the Parliaments of the European Union and Great Britain ratify the agreement. However, traders thought that Brexit "with Deal" is possible as ever, and for some reason the Parliament this time will not put a stick in the wheel for Boris Johnson, and zealously rushed to buy a pound. However, we believe that it is Boris Johnson who will be most likely to be deprived by the deputies to implement his version of the deal. And Boris Johnson himself is to blame for this, who by all means and almost openly wanted to remove Parliament from his affairs so that it would not stop him from implementing Brexit as the Prime Minister himself considers it necessary. As a result, the parliament was angry, through the Court it managed to cancel the suspension of its work, legally obliged Johnson to ask for a postponement if the deal was not reached or if it didn't fit the Parliament. And now, all the participants in the Action have come close to the point where everything will depend on the Parliament of Great Britain. According to rough estimates, Johnson's deal no longer passes through Parliament, as the Labor, Unionists and Democratic Scots refused to support it. Thus, for the transaction to pass on the sidelines of the Parliament, all conservatives and some opposition MPs, for example, Labor, must vote for it.

Labor spokesman John McDonnell said: "I do not believe that the agreement will pass, I think it will be rejected, but the numbers will be fairly close." This statement perfectly reflects the mood of the Labor Party, whose leader called the deal "corrupt". And the European Parliament generally refused to vote for the agreement until the results of the vote in Britain are known, I understand very well that the likelihood of an agreement is not very high.

What to expect from the pound/dollar currency pair today?

The pound/dollar pair completed the close above the Fibo level of 61.8%, so I expect today to continue the growth, which is still difficult to explain. Traders' optimism continues to cause surprise, but if Parliament passes a deal tomorrow, it will turn out that the pound's rise was justified. Otherwise, I will wait for the strongest fall in the British currency.

The Fibo grid is based on the extremes of March 13, 2019, and September 3, 2019.

Forecast for GBP/USD and trading recommendations:

I recommend buying the pair with a target of 1.3044, as it was closed above the Fibo level of 61.8% with the stop-loss order below the level of 1.2836.

I recommend considering sales of the pair with the target of 1.2668 today if consolidation below the Fibo level of 61.8% is completed.