The GBP/USD pair faced multidirectional trading on Monday, November 30. It is extremely difficult for novice traders to trade this pair right now. Over the past few weeks, quotes have repeatedly overcome rising trend lines and channels, thus breaking the seemingly upward trends, at first glance. However, it went back to moving up. In recent days, the quotes have been tightly stuck between the levels of 1.3397 and 1.3292, i.e. approximately in the stop-point of the horizontal channel. During the day, the pound/dollar pair was trading neatly in the middle of the horizontal channel, changing direction several times. Therefore, there is no trend right now, the horizontal channel is too narrow to look for short-term trends inside it, and the price also manages to move extremely erratically within the day. Therefore, we advise you to be very careful when trading this pair or do not trade it at all.
The fundamentals on Monday were even more confusing than the technical picture. By and large, the trade talks between the EU and the UK is still the key topic. However, both parties have great difficulty moving forward and are constantly on the verge of failure. For example, Michel Barnier said that negotiations could be completed on Wednesday, and British officials believe that everything should be decided this week. Novice traders need to understand the essence of these negotiations. If the trade deal fails, Britain and the EU will trade with duties and tariffs starting on January 1, 2021. Not as two friendly powers, but as countries that see each other for the first time. Naturally, this will negatively affect the volume of imports and exports in both directions, and the fall in these indicators will negatively affect production, business, GDP and the economy as a whole. Both for the European Union and Great Britain. This, of course, will be a much bigger blow for Great Britain than it is for the EU. Therefore, no deal = serious contraction of the British economy and, very likely, a strong fall in the British currency.
The UK Manufacturing Business Activity for November will be released tomorrow. This indicator is expected to remain at 55.2, which is a fairly high value. However, trade negotiations and their results are of much greater importance for the British pound right now, and not business activity. We are still expecting the pound to start falling, just like the European currency. There is practically no important information coming from America at this time.
Possible scenarios for December 1:
1) Traders failed to overcome the 1.3397 level, and so the pair has just been trading in a horizontal channel for a week. Therefore, long deals are irrelevant now. You have to wait for a new upward trend or until the 1.3397 level has been overcome in order to be able to expect the return of the upward trend.
2) Short deals, from our point of view, are more convenient now, and for a number of reasons. The upward trend line has been overcome, the pound has been growing for a long time, the fundamental background is still not in favor of buyers. Therefore, we believe that the downward movement will extend until next week. In order to be able to open short positions, novice traders are advised to wait for the upward correction, afterwards a new sell signal from MACD. Aim for support levels 1.3281 and 1.3242.
