The GBP/USD currency pair also traded with a downward bias on Monday. And unlike the euro/dollar, this downward bias has been brewing for several weeks. Recall that in recent weeks, the pair has tried several times to start a downward trend or at least a correction, overcoming all kinds of trend lines or channels, but at the same time, managed to grow by 600 points to the level of 1.3740 on the one factor of the rate increase by the Bank of England. More precisely, not on one factor, but this factor is the only visible one. All the other news that came from the UK spoke, rather, about the imminent fall of the British pound. Unfortunately, the UK has now plunged into a political crisis again, which will be discussed a little later. And when the issue of changing the leader is on the agenda in the country, it is unlikely that the national currency can become more expensive. Moreover, Britain cannot boast of strong macroeconomics either. Yes, its macroeconomic indicators are growing and in general, cannot be called "weak" or "failed". However, every day more and more experts are talking about significant losses due to Brexit, and most Britons negatively assess the changes that have occurred over the past year. Of course, the British government cannot be unequivocally blamed for the unsuccessful "divorce" with the European Union. At least because the coronavirus pandemic has been superimposed on this "divorce" and now it is not clear which losses were associated with Brexit and which with the pandemic. This, by the way, is a very successful disguise for Johnson and his followers. Any losses, failures, recessions can be explained by a pandemic. They say that if it were not for him, the country would have risen from its knees long ago after leaving the EU. However, you can't fool ordinary people. If they begin to live worse, there is a shortage of labor in the country, a shortage of some goods, then they are unlikely to be satisfied and support the current government.
Boris Johnson made too many mistakes.
62% of Britons believe that Boris Johnson will not stay in his seat until the end of 2022. This figure most eloquently reflects the attitude of the British to the current government. Experts have even come up with a new name – "Boris the bubble" by analogy with the "financial bubble", which always bursts in the end. We have repeatedly listed a huge number of scandals and "stories" into which the British Prime Minister is getting into with wild persistence. However, among them, some very sad moments are associated with the absolute incompetence of the current government. Everyone has already forgotten the failure of the British authorities in the fight against the "coronavirus" on the first "waves". Everyone has already forgotten the dispersal of parliament to push through a "hard" Brexit. Everyone has already forgiven Boris for having fun all through 2020 and 2021 at various parties while the British were forbidden to gather in companies and go out. Everyone no longer remembers the scandal with the renovation of the residence on Downing Street, for which money appeared "out of thin air", or Johnson's vacation with his family on the private island of one of the UK's major businessmen. But what can you do if Johnson can't keep his name off the front pages of the tabloids for at least a week? The story of Owen Paterson, who lobbied for his interests through parliament and for whom Boris Johnson stood up, casting a shadow on himself. The story of the election failure in North Shropshire, where the Tories have not lost for 200 years. Now the failure of the Conservatives in North Shropshire is being talked about almost as an uprising against Johnson and the current government. The quiet countryside showed record turnout results for the elections, the results of which amazed everyone. After all, it was not even the Labor Party that won, but the Social Democrats, who have as many as 13 out of 650 seats in parliament. All this is very similar to what happened in the States at the last election, which became a record turnout. Although Donald Trump also scored a record number of votes, it was not Joe Biden who scored even more, but "anyone but Trump." It seems that if Michael Jordan or Shakira had been instead of Biden, they would have won no fewer votes. And the Conservatives and Johnson now have to look forward with horror to the next election, in which they may suffer an even more resounding failure than their victory was 2 years ago.
The average volatility of the GBP/USD pair is currently 72 points per day. For the pound/dollar pair, this value is "average". On Tuesday, January 18, thus, we expect movement inside the channel, limited by the levels of 1.3572 and 1.3716. The upward reversal of the Heiken Ashi indicator signals a possible resumption of the upward trend.
Nearest support levels:
S1 – 1.3611
S2 – 1.3550
S3 – 1.3489
Nearest resistance levels:
R1 – 1.3672
R2 – 1.3733
R3 – 1.3794
Trading recommendations:
The GBP/USD pair began to adjust in the 4-hour timeframe. Thus, at this time it is recommended to consider new longs with targets of 1.3716 and 1.3733 if the price bounces off the moving average line. It is recommended to consider short positions if the pair is fixed below the moving average with targets of 1.3572 and 1.3550, and keep them open until the Heiken Ashi indicator turns upwards.
Explanations to the illustrations:
Linear regression channels - help to determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which you should trade now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.