4-hour timeframe

Amplitude of the last 5 days (high-low): 150p - 78p - 66p - 70p - 134p.

Average volatility over the past 5 days: 99p (high).

The GBP/USD currency pair has been treading water for the last two days, as if not knowing where to go next. The first support level of 1.2203 worked out perfectly, point to point, followed by a rebound and a correction began, similar to the correction for the EUR/USD currency pair. As in the case of the European currency, it is strange that the pound has not continued to fall today. The fact is that the US ADP report on the change in the number of people employed in the private sector cannot be called a failure. But it is possible to do so for the British index of business activity in the construction sector. The total value for September fell to 43.3. Recall that any value of the indicator of business activity below 50 is considered to signal a decline. Of course, we can say that both reports do not have the degree of significance for traders to unconditionally respond to them. On the labor market in the United States, NonFarm Payrolls is more important, and in Britain, indexes of business activity in the areas of production and services are more interesting.

Meanwhile, at the annual conference of the Conservative Party, Boris Johnson announced that he would forward the latest proposal to the EU leaders regarding the "deal" on Brexit. According to the odious prime minister, if it does not suit European leaders, then London officially refuses further negotiations and prepares for a "hard" exit on October 31. Of course, Johnson again did not even tell his party members how he was going to circumvent the law obliging him to ask the European Union for a postponement and prohibiting him from implementing Brexit without a deal. But Boris Johnson has excellently publicized his proposal of the EU among his party members, calling it "constructive and reasonable, which will allow a compromise on both sides." But now, will the bloc consider him such? Johnson also said that his plan would be based on the principles of "the absence of customs points on the border between Ireland and Northern Ireland" and "the United Kingdom gaining full control of foreign trade policy after Brexit". Not even a few hours after the speech of the prime minister of Great Britain, skepticism has already emerged from EU countries. The first to speak was Irish Foreign Minister Simon Coveney. He said that such a plan "is not able to become the basis for an agreement on Brexit." However, we believe that it is better not to rush things, and wait for the comments of Jean-Claude Juncker, representatives of the European Parliament or the European Commission, as well as the leaders of the EU member states.

As a result, we can say that the fundamental background for the pound/dollar pair has not changed much. Yes, there was enough important and interesting information published reports, but they are all more neutral in nature. As before, everything rests on Brexit, on the uncertainty associated with it. We consider this general fundamental background for the pound to be negative. By the way, the technical picture of the pair, despite the correction and rebound from the level of 1.2203, also implies the resumption of the downward trend. There was no consolidation above the critical Kijun-sen line. All lines of the Ichimoku indicator are still directed down. At the same time, volatility remains at a fairly high level - about 100 points per day, which indicates that traders did not leave the forex market.

Trading recommendations:

The GBP/USD currency pair is currently being adjusted. Thus, we recommend that you wait for the correction to complete, and then again consider buying the US currency while aiming for support levels 1.2203 and 1.2177. It's not recommended that you return to buying yet.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.