4-hour timeframe
Technical details:
Higher linear regression channel: direction - sideways.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: -36.5471
The British pound, paired with the US dollar, continues to "jump" and "dance". After the pair's quotes fell by 300 points a week and a half ago after the Fed meeting, it was possible to update these lows by 50-60 points. We can conclude that the bears currently do not have enough strength to continue moving the pair down, and the US dollar – up. Yesterday, the pair's quotes were again below the moving average line. However, this does not increase the probability of a further fall in any way. Recall that the pound and the euro are now very similar technical pictures. At the same time, both on a 4-hour timeframe and a 24-hour one. On the 24-hour TF, we expect a new round of corrective movement, which should end near the previous minimum (in the area of 1.3600-1.3666). Thus, the pound may well fall by about 100-150 points from its current position. Another thing is that this requires (preferably) new grounds and reasons. In the meantime, there are none. However, sometimes markets make impulse decisions without a "foundation" or "macroeconomics". For example, it was on July 6. Thus, the euro may fall by another 100 points, and the pound - by 100-150 points. From a technical point of view, almost ideal prospects are emerging. At the same time, we remind you that the current downward movement (within which even both linear regression channels have ceased to be directed upwards) is just a correction against a long-term upward trend (this statement is true for both the euro and the pound). Thus, for the time being, we continue to consider the option of resuming the fall of the US currency as the main one.
Meanwhile, there is traditionally little positive news in the UK. At the moment, several topics remain completely incomprehensible at once. For example, how are the UK authorities going to remove all quarantine restrictions on July 19 and allow Britons to go everywhere without masks, if already 25-30 thousand new cases of the disease are recorded in the country every day, and doctors around the world note the presence of an "Indian" strain of the virus (aka "delta" or "lambda") among the sick. In addition, in the UK itself, several deaths were found from the "Indian" strain among people who had already been vaccinated. And in Israel, doctors concluded that the Pfizer vaccine has only about 60% effectiveness in countering the "lambda strain". In general, the news is very sad. So far, the British authorities are counting on the fact that the pace of vaccination will allow the entire population of Britain to be vaccinated within a month, a maximum of one and a half. But in practice, everything may not turn out so "sweet".
It is also absolutely unclear how all the proceedings between the European Union and the UK will end. At the moment, it is clear that Brussels does not want to escalate the situation and so far is limited to threats, offering London to sit down at the negotiating table and stop unilaterally changing the points of already concluded agreements. However, any patience comes to an end sooner or later. It is unlikely that the European Union will watch for a long time how London changes the "Northern Ireland protocol" because it considers it ineffective. In addition, the UK continues to be in some decline after the epidemic, the crisis, and Brexit itself, although, for example, the government and the Bank of England regularly try to make a "good face at a bad game". The Bank of England, which six months ago was actively considering the possibility of reducing the key rate to the negative area, suddenly began to give "hawkish" signals from time to time. Of course, in reality, this is unlikely to happen, since you do not need to be super-economists to look at the macroeconomic indicators of Britain and the United States and compare them. The difference, as they say, is visible to the naked eye. Boris Johnson also continues to shine, and sprinkle in all directions the "bright future" of Great Britain. However, now the time has come when the British government needs to show real growth and real recovery after Brexit. But the fourth "wave" of the epidemic may disrupt these plans. Recall that there is still no clear unanimity among the British population in the answer to the question of whether Brexit was necessary at all and whether something has changed for the better now that six months have passed after its completion and 5 years since the independence referendum. So far, even the British themselves can not unequivocally answer the question, has it become better to live in the country? But in a couple of years, new elections will be held in the UK, so Boris Johnson will need to show real results of his activities and real advantages from Brexit. And this is if by that time Scotland will not have time to leave the Kingdom, otherwise, Boris Johnson will also have to explain why the territory of the UK has become smaller because of the same Brexit. If Scotland does not have time by then, then the main slogan of the conservatives may already be: "Let's preserve the integrity of the United Kingdom!".
As for the British pound, at the moment, it continues to pay attention only to global factors. All future, possible and hypothetical topics, processes, and incidents are still of little interest to market participants. Therefore, it is not worth rushing with their implementation with the exchange rate of the British currency.
The average volatility of the GBP/USD pair is currently 89 points per day. For the pound/dollar pair, this value is "average". On Thursday, July 8, we expect movement inside the channel, limited by the levels of 1.3706 and 1.3884. A reversal of the Heiken Ashi indicator upwards will signal a new round of upward movement.
Nearest support levels:
S1 – 1.3794
S2 – 1.3733
S3 – 1.3675
Nearest resistance levels:
R1 – 1.3855
R2 – 1.3916
R3 – 1.3977
Trading recommendations:
The GBP/USD pair resumed its downward movement on the 4-hour timeframe and consolidated below the moving average. Thus, today it is recommended to stay in sell orders with targets of 1.3733 and 1.3706 until the Heiken Ashi indicator turns up. Buy orders should be opened if the price confidently overcomes the moving average with targets of 1.3884 and 1.3916, and keep them open until the Heiken Ashi turns down.