08.09.202011:37 Forex Analysis & Reviews: Pound fell due to Brexit, but tries to rise again

Despite continuous losses, the British currency is not going to give up. The pound, whose rise was interrupted again by Brexit issues, is getting ready to attack the price highs.

According to analysts' observations, the pound has been declining over the past four days, due to the persistence of the British authorities in matters of a trade deal with the EU. It can be recalled that they were requesting for a "softer" exit from the European bloc on mutually beneficial terms. However, the negotiations are now at an impasse, and the option to compromise is now in doubt.

The negotiations between Brussels and London ended up not just at a dead end, but in a kind of aggressive maze, from which there is only one way out - a final break. According to experts, this scenario deprives the parties of the opportunity to agree.

On the other hand, the British government will prepare a bill in the near future, and according to which, the previous agreements reached in the process of discussing a trade deal between Britain and the EU will be invalid. For the UK, this increases the likelihood of entering 2021 without a trade deal. Meanwhile, currency strategists at Dow Jones Bank said that the implementation of such a scenario will drop the pound to critical levels. They expect it to decline this month and do not exclude the possibility of continuous fall by the end of this year.

Meanwhile, there is slight hope for the restoration of negotiations and a compromise between London and Brussels. At the moment, the deadline for concluding the deal is October 15 of this year. If there are no positive changes in a month and everything remains on the principle of "who is still there", then a "soft" Brexit will not be seen. Thus, experts conclude that the United Kingdom will have to comply with the requirements of the World Trade Organization (WTO).

Yesterday, GBP lost 0.6% to 1.3198. Thereafter, the downward trend gained impulse, despite the pound's desperate attempts to slow down the decline. Today, the GBP/USD pair was seen trading near the range of 1.3144-1.3145, trying unsuccessfully to get out of the low range.

Amid the increasing risks associated with Brexit, experts recommend selling the pound. The probability of a further decline in the GBP/USD pair has increased significantly, and testing of the next resistance level at 1.2929 is becoming a reality. Therefore, analysts fear that the pound will critically fall, in which the recovery of the currency becomes prolonged and difficult. An additional factor stretching the pound is the recent recovery of the dollar across the entire market spectrum. The rise of the US currency poses a threat to the successful rise of the British currency. Experts summarize that all the successes of the pound associated with its short-term rise in price are a reflection of the dollar's failures.