GBP / USD. Pound does not believe in "soft" Brexit

After the turbulent events of the past week, the financial world froze in anticipation. In early December, it will become clear whether the market will return to a state of relative stability or global uncertainty will continue further, defining the corresponding prospects for 2019. Given such an eventual fork, any prediction of currency strategists somehow comes down either to Brexit or to US-China trade relations. In the case of the pound-dollar pair, both topics are relevant - especially now, on the eve of the G20 summit and the key vote in the British parliament.

Brexit has an unconditional priority for the pound - all other fundamental factors are of secondary importance. These may affect the dynamics of the currency only if an information vacuum is temporarily created around the "main" theme. Recently, there are practically no such periods: the prospects for the most important voting are spoken daily, the most diverse speakers - from political scientists to the leaders of British political parties.

The disposition at the moment is as follows : there are 650 deputies in the British parliament. Meanwhile, the prime minister needs 320 votes in favor in order for the deal to pass through the millstones of the House of Commons. The complexity of the situation lies in the fact that, after the extraordinary re-election, the conservatives have lost the majority - now they are only left with 316 votes. In this regard, they entered into a coalition alliance with the Democratic Unionist Party (DUP), 10 deputies of which has provided control over parliament to conservatives. Theoretically, Theresa May has the necessary number of votes. However, in practice, the situation is completely different. Unionists have already managed to declare that they will not vote for the draft deal: a similar statement was made by the representatives of the Labor party and the Scottish National Party.

One must not forget about the quoted currency GBP / USD - dollar. On the eve of the G20 summit, Trump made a rather unfriendly statement about the introduction of new tariffs on Chinese imports - from January 1 of next year. Such rhetoric only increased the importance of the G20 summit, which will begin this Friday. Against the background of increased uncertainty, the American currency is again increasing its position: the dollar index is in the area of 97 points. In other words, the uncertainty of the British currency and the restoration of the greenback determine the southern trend for the pair. The nearest support level is far below the current levels at around 1.2670. This is the bottom line of the Bollinger Bands indicator on the daily chart.

Analysis are provided by InstaForex