Long-term investment in currency pairs! The GBP/USD pair!

In most cases, currency pairs have unidirectional dynamics throughout the year, and one of these currency pairs in 2018 was the GBP/USD pair. At the end of the year, the pair of the British Pound US dollar showed a steady downward trend since mid-April and lost more than 13% over the entire downward dynamic. This actually fully covers the growth of this pair in 2017.

Factors in reducing for the GBP/USD in 2018:

1. The main factor of the decline in the GBP/USD pair in 2018 was the divorcing process of the UK and the EU, called Brexit. Thus, the political debate and mood swings during the negotiations, which varied from soft Brexit to tough Brexit, directly affected the dynamics of the British pound. It is worth noting that the British pound was more vulnerable against the dollar, showing a more significant decline against the US currency than against the euro, the direct opponent in Brexit. And in terms of annual volatility, the GBP/USD pair is comparable to GBP/JPY, which is among the most volatile currency pairs.
2. After the political debate in the UK at the end of 2018, which resulted in the UK Prime Minister T. May expressing a vote of no confidence, but which did not receive majority support, Brexit remained the main risk factor for the UK and the British pound. Since the European Union remains firm in its decision and does not going to make concessions anymore. While the UK government has split over Brexit, actually preparing the market for a tough Brexit, which is also indicated by the economic situation in the UK. In addition, it is worth noting that at the start of 2019, Great Britain is ready to leave the EU without a deal.

Expectations for 2019

With geopolitical risks remaining around Brexit and global risks, the GBP/USD pair is likely to maintain its general downward dynamics. It is worth noting that long-term investments must comply with money management and are suitable for VIP clients of Ester Holdings Inc.

Technically, the GBP/USD pair remains under the pressure of the downward channel, the upper limit of which is located at the level of 1.2900-800, from which a rebound is expected with a further decrease. The main support levels and goals are located at the levels: 1.2390, 1.1780 and 1.1180. Resistance is located at levels: 1.3170 and 1.3700, updating of which will cancel the expectations for reduction. The main risk factor is the change in the British policy regarding Brexit, which is possible against the backdrop of political instability.

Anton Hanzenko