If the single European currency managed to show a very small growth at yesterday's trading, then the British pound fell significantly against the US dollar. Tougher restrictions from the COVID-19 pandemic, which do not bode well for the British economy, appear to have overshadowed the trade agreement between the United Kingdom and the European Union. As it became known, despite the beginning of vaccination with the Oxford/AstraZeneca drug, the UK government has already introduced a third and tougher lockdown. The new restrictions will come into force from tomorrow, however, investor sentiment towards the British currency is hopelessly damaged. The vast majority of educational institutions in the UK will be closed, and students will switch to distance learning. The situation with coronavirus infections is particularly difficult in Scotland, and if we take into account the emergence of a new British strain of COVID-19, things in the British Kingdom are very far from stable.
Daily
After yesterday's initial rise to the level of 1.3700, information about the tightening of quarantine measures completely changed the mood of investors to the British pound, and it fell under a fairly strong wave of sales. As a result, a very impressive bearish candle appeared on the daily chart with a closing price of 1.3569. It seems that now it will be much harder for the pound bulls to resume the growth of the quote, not to mention the true breakdown of strong resistance in the area of 1.3700. Nevertheless, the main fundamental events of this week are still ahead, and much will be decided on Friday when data on the labor market of the United States of America will be published. In the meantime, the pound/dollar pair is mostly dominated by bearish sentiment, however, the situation in the foreign exchange market is changing so quickly that you can expect anything.
Today's attempts of bulls on the pound to return the rate to the upward dynamics were limited at 1.3611, after which the pair turned in a southerly direction and is trading near 1.3555 at the end of this article. In my opinion, the main trading recommendation will be considered sales after short-term rises in the price area of 1.3600-1.3630. This idea will be confirmed if reversal patterns of candlestick analysis appear in the designated area on lower time frames.
H1
In the meantime, I recommend paying attention to the strong support level of 1.3537, slightly above which is the hourly 200 exponential moving average. If bullish candlestick patterns appear in the area of 1.3540, this will be a signal to open long positions on GBP/USD. Sales, as already emphasized above, should be considered after a pullback to the price zone of 1.3600-1.3620, where the broken support line of the abandoned ascending channel passes, as well as the 50 simple moving average. More aggressively and riskily, you can try to sell the pair after another rise to the black 89 exponential, which currently passes at 1.3592 and provides the nearest resistance to the price. From the macroeconomic statistics that may affect the course of trading on GBP/USD, I recommend paying attention to the production index of the Institute for Supply Management (ISM) of the United States, which will be published at 16:00 London time.