The rates continue within a downtrend. As expected, with autumn's approach, the pressure on the pound will only increase. The period of optimism associated with resistance to Boris Johnson's plans to leave the EU on October 31 without a deal is passing, and today we can see a continuation of the trend.
In addition to Brexit, the pound is under pressure due to the economic downturn in the EU, which motivates investors to return to safe assets. In this regard, the Swiss franc is considered to be more preferable at the moment, in comparison with the GBP. Therefore, yesterday, despite good macroeconomic reports, the pound was weaker than the CHF. Perhaps the situation will change today, when Boris Johnson is expected to submit the latest proposal for a deal on Britain's exit from the EU. However, according to rumors, these proposals are likely to be rejected.
The economic situation in Switzerland is as far from ideal as in the whole region. Business activity in the industrial sector, in September fell to 44.6 pips - the lowest in 10 years. Retail sales are also decreasing rapidly and the inflation is slowing. The CHF receives support only due to its status of a safe asset and the fact that the GBP is weakened even more.
In this situation, we expect the trend to continue, which means that the deals to SELL remain relevant. Technical analysis tools are multidirectional. Nevertheless, we believe that in this case, the MACD oscillator gives the right signal to open short deals.
