Speculation on the pound attracts black clouds on Forex

The never-ending epic about Brexit, as well as its final form, has made the British pound price fluctuations relative to other currencies huge. Volatility in pound is the largest in four years. Among other things, it prompted the president Bank of England to pay attention to the fact that the Forex market can be an arena of large scams. The case is also being investigated by the European Union.

They will come out - they will not come out, they want - they do not want it, hard Brexit or with a trade agreement… For months we have been inundated with information about the UK leaving the European Union. Every now and then there are leaks from negotiations, or not fully specific declarations of politicians who are "Close to agreement", "They have a plan" etc .. Each such information, and even a rumor, has a huge reflection in the exchange rate of the British pound. Price movements by 1,5 percent. no longer surprise anyone within an hour. And no one needs to be convinced that you can earn millions on it. Or lose ...

The agreement is getting closer, but ...

The situation in the pound is similar to the period when the Brexit referendum was held. It was then - after the first polls, suggesting how it will end - that the strong sell-off of the British currency started and it lasts practically to this day.

The last days were, however, a rally upwards after politicians began to talk about the impending agreement. It is to be included at the just-moving EU summit, but more honestly officials point out that no documents have yet been signed and negotiations are still ongoing. The position of Great Britain supposedly got stiff, so talks got stuck. Some parliamentarians do not like the proposal of the agreement, which portends a difficult further path.

Equal rules for Forex and stock exchanges?

Mark Carney, the governor of the Bank of England, took the floor on this matter, and considers the recent volatility on the pound to be something that may put the entire currency market in a negative light. He also has a proposal on what to do to prevent such aggressive and speculative changes in currency prices from occurring in the future. He bets that without introducing quick legal corrections, Brexit will still be "played" by speculators. What are these corrections?
Mark Carney emphasizes that the Forex market should be regulated in the same way as trading stocks or bonds. Especially since London is responsible for most transactions on this market, and the daily turnover exceeds 5 trillion USD.

The European Union also became interested in the matter. Talks between the European Commission and ESMA with representatives of the city of London are already advanced. Their completion is planned for November 29 2019 year. Forex plans are under abuse regulations.

“The market abuse framework should be in line with developments in the financial industry. It should be emphasized that they are to serve to protect customers and investors as much as possible " - stresses Steve Maijoor, President of ESMA.

The pound is waiting for specifics

Currently, the British pound against the dollar has calmed down slightly. The key to the further direction will be the European Union summit and the decisions that will be taken at it. The GBP / USD pair tested support around 1,2570, which resulted in another wave of dynamic increases. The resistance around 1,2750 was also quickly broken. We have a clear upward trend in the short-term horizon.

Chart GBP / USD, M30 interval. Source: xNUMX XTB xStation

Quotations are not changing dynamically yet. The market is constantly expecting signals from politicians. If the contract is not signed, the pound can quickly break down and test the next lows. We recommend prudence when deciding to leave open positions for this weekend.