Black British pound series. Rate in a downward trend

Two weeks of strong declines in the British pound are the result of the continuation of the Brexit turmoil and the upcoming elections to the European Parliament, which - according to polls - should be won by the Eurosceptic party. Important economic data on Wednesday and Thursday, on Thursday the British are headed to the polls.

Although investors are no longer panicky at every statement from politicians from the United Kingdom, the accumulation of bad news has meant that the price of the pound regularly slips. Last week it was by far the weakest currency from those considered to be market leaders. Practically, on every currency pair with a pound it was worth having a short position, which translated into substantial profits. No other currency from the G8 group has brought such spectacular results.

The reasons for weakening the pound are still the same

At the beginning of the confusion with Brexit, we had a slightly different situation. Every vote, leak and even rumor caused huge fluctuations in the British currency. With time, when Brexit became more and more a fact and not a possible threat, the market ceased to react nervously. However, he chose one direction and at a different pace, but he still overestimated the currency of the United Kingdom.

The declines deepened when it turned out that the next ideas of Prime Minister Theresa May do not bring a solution and do not dispel any doubts. Still no one knows under what conditions Britain will leave the European Union. It is not known whether it will be an agreement that will allow, for example, problems in trade or the so-called hard Brexit, which may result in the necessity to withhold supplies of certain goods. Nobody needs to be persuaded that it would be a blow to the British economy, which would allow it to rise for a long time. It is also worth remembering that Great Britain has been a net importer for years, so a weak pound is not on her hand.

Theresa May also has political problems. Although she recently won a vote of confidence, which in practice ensures her "immunity" for the next 12 months, more and more her political supporters are pressing her to resign herself. Much depends on whether it will push through the Brexit bill in parliament in the coming days. However, if it is once again the same project that has not been recognized so far, it is hard to expect a miracle.

Important data and eurobanks

The elections to the European Parliament will take place this Thursday, May 23 in Great Britain. According to polls, the clear favorite of the vote is a grouping called Brexit, led by the controversial Nigel Farage, who is accused of being financed by a Russian billionaire closely linked to the Kremlin authorities. Despite this, the eurosceptic party can count on around 35 percent of the vote. The Democratic Party, which is still ruling Great Britain, will suffer a spectacular defeat, for which less than 10 percent of the vote is declared to vote. British people interested in the elections. Mobilization among voters is high, because Brexit supporters wanted an early exit from the European Union, which failed. Now they intend to "repay" for it at the urns.

Earlier, we will get to know important macroeconomic data, which will also be important for the pound's immediate future. On Wednesday at At 10:30 the CPI (prices of consumer goods and services, or simply inflation) will be published, and on Thursday at 10:30 basic retail sales. The forecasts are pessimistic - they assume an increase in inflation and a decline in retail sales.

Technically - a strong downtrend

Although the pound is currently influenced mainly by political decisions and the resulting macroeconomic data, it is also worth taking a look at how the currency looks technically. On the popular "cable", that is, a pair GBP / USD, the downward trend is very strong. The closest - and very weak - support can be found around the 1.271 rate. The first important ones are around 1.246.

So if nothing happens that will stop the downward trend, most analysts tend to drop the pound rate in this area. Of course, adjustments are possible in the trend, but now the chart is vainly looking for signals that allow us to hope that the trend will reverse and the currency will begin to strengthen rapidly.