27.02.202010:15 Forex-elemzések és áttekintések: Boris started again and strikes the pound thrice

Good afternoon, dear traders!

Yesterday, the GBP/USD pair declined after Boris Johnson refused to accept the option of a trade agreement with the European Union. During the day of Wednesday, the pound lost 1000p, breaking the bullish trend of the last two days. There are three reasons that can be considered here.

Three strikes on the pound:

1st strike: I remind you that formal negotiations on a trade agreement will take place in March. However, Boris has already rejected all the conditions of European Union at this stage. Therefore, investors lay the risk of exit without agreement.

2nd strike: The second point is the problems with the budget of Britain, which must be provided on March 11. To increase budget spending, it will be necessary to raise taxes and borrow money, and Finance Minister Rishi Sunak knows this.

3rd strike: Well, here's the third blow to the pound - this is the inevitable reduction in interest rates, which may occur this spring, including due to a decrease in global economic growth due to the spread of the epidemic around the planet.

Against this background, I suggest to consider the short scenario from yesterday's initiative within the framework of the ABS system.

In case that the British continue to be stubborn (and this is their national trait), against the background of a likely lower rate (as the Americans did last year), then there is a probability that we can see the pound at 1.27500:

I recommend that intraday work on lowering on smaller time frames (TFs) with the first goal of holding the position until yesterday's breakdown with the transfer to breakeven and further on goals.

Have a successful trading and control the risks!