The rates continue to be in the consolidation stage, which we have seen over the past 40 days. The pound is supported by expectations of Boris Johnson's election victory in 2 weeks, and consequently, the end of the political crisis and uncertainty with Brexit. At the same time, the UK is not in danger of leaving the EU without a deal as it was before.
A poll published this week showed that the Conservatives may get the best results in the election, which they have not had since the 1980s. However, the pound lacked support from economic indicators for further growth. The protracted process of leaving the EU has had a negative impact on the British economy, which is already weakened by the economic downturn in the EU. The consumer confidence index remains at the lowest level for the last 6 years. This has a negative impact on retail sales, which have gradually declined over the past three months, which certainly does not contribute to economic growth.
The yen has rarely found support as a safe asset in the past few months, and strengthening due to economic growth is also not expected. The latest reports show a drop in industrial production by 4.2% to the lowest level in 5 and a half years. According to forecasts, such a fall was not expected. However, the yen lost positions slightly against the GBP as demand for risky assets was limited by the end of the week due to rising tensions between China and the United States. Donald Trump has signed a bill supporting pro-democracy demonstrations in Hong Kong, and China regards this as a step against it and an interference in its domestic policy. Therefore, investors fear that this will negatively affect the process of concluding a trade deal between the two countries.
On the chart, we can see that the resistance line of the flat trend has been repeatedly tested in November. At the same time, the market remains quite optimistic, and the pound can count on further support as the parliamentary elections approach. Therefore, there is every reason to expect the completion of the consolidation period and the resumption of the uptrend, or at least a shifting of the resistance line up. Thus, the deals to BUY can be considered the most optimal. The entry points to the market can also be considered at the levels 139.052 and 141.505, which can be the points of resumption or reversal of the trend. Most technical analysis tools, including the Stochastic oscillator, also indicate the effectiveness of the deals to Buy.
