On Tuesday, the GBP/USD currency pair decided to follow the EUR/USD pair's lead and calmly continued to decline. Consequently, by midday, the pound was trading near the 18th level, with only about 400 points separating it from the 2020 lows. Similarly, the British pound declined for no apparent reason. Both European currencies continue to decline, and it is currently unclear which of the numerous previously cited factors negatively impacts risky currencies. The geopolitical situation is currently most challenging on the European continent. We sincerely believe that the Third World War will end everything, as military conflicts do not end so abruptly for no reason. To end the conflict in Ukraine, either the government in Ukraine or Russia must change, or one of the parties must suffer a military defeat at the hands of the other. Let's evaluate each possibility.
Government change in Kyiv. During martial law, elections do not occur. Therefore, the only viable option is Zelensky's physical elimination. Unlikely. Moscow's government has changed. Even less probable than the first possibility. The military defeat of one party. Russia has an enormous budget, enormous revenues from the sale of oil and gas, and an enormous military potential, regardless of what anyone says. Even if we are discussing tanks from the 1960s, these tanks can still drive and fire. Ukraine now possesses a much more potent trump card – the support of the West, which has just begun to supply heavy weapons in sufficient quantities to alter the course of the conflict. Without a doubt, the United States will continue to adhere to the lend-lease program, and in Europe, it is now acceptable to aid Ukraine and adhere to "anti-Russian" rhetoric. Thus, a fourth option presents itself: the governments of one or more Western countries that provide substantial assistance to Kyiv should change. As can be seen, almost all of the options require some form of government modification. Consequently, the conflict will not end within the next few months.
On July 13 and 14, the first two rounds of voting to elect the leader of the Conservative Party will take place.
In the meantime, everyone in the United Kingdom is preparing for the election of a new Conservative Party leader. During the elections, it became known that the 1922 Committee adopted certain modifications. To nominate you as a candidate for the elections, you must now receive the support of at least 20 conservative deputies (previously 8). To advance to the subsequent round, a candidate must receive at least 30 votes. There are currently 11 candidates for the new Prime Minister of the United Kingdom, but only three have received at least 20 votes. Thus, there are currently three applicants. Foreign Minister Liz Truss and former Finance Minister Rishi Sunak are among them.
As reported from the United Kingdom, Sunak has the best chance of victory, as he has already secured the support of over thirty deputies. On July 13 and 14, the first two rounds of voting will be held this week. The new leader of the Conservative Party will be announced on September 5, the date of the prime ministerial transition. Thus, Boris Johnson will continue to serve as leader until September 5. Sunak's election speech, in which he discussed economic recovery and national unification, failed to impress. Nearly all candidates utter such sayings in every election. Liz Truss discussed the confrontation with Vladimir Putin and Russia's military defeat in Ukraine. However, how many of her colleagues prioritized the military conflict in Ukraine and its outcome over their economy and country? Regardless, we anticipate very intriguing elections, the outcome of which will significantly impact the European continent. Specifically, the relations between the European Union and the United Kingdom, which the charismatic and resolute Boris Johnson was unable to establish.
The average five-day volatility of the GBP/USD pair is 129 points. This value for the pound/dollar pair is "high." On Wednesday, July 13, we anticipate price action within the channel, bounded by the levels of 1.1772 and 1.2028. The Heiken Ashi indicator's upward reversal will signal a possible new round of corrective movement.
Nearest support levels:
S1 – 1.1841
S2 – 1.1780
S3 – 1.1719
Nearest resistance levels:
R1 – 1.1902
R2 – 1.1963
R3 – 1.2024
On the 4-hour time frame, the GBP/USD pair maintains its downward momentum. Therefore, until the Heiken Ashi indicator turns up, you should maintain sell orders with targets of 1.1841 and 1.1780. When the price is fixed above the moving average, buy orders should be placed with targets of 1.2024 and 1.2085.
Explanations for the figures:
Channels of linear regression – aid in determining the current trend. If both are moving in the same direction, the trend is currently strong.
Moving average line (settings 20.0, smoothed) – determines the current short-term trend and trading direction.
Murray levels serve as movement and correction targets.
Volatility levels (red lines) represent the likely price channel that the pair will trade within for the next trading day, based on the current volatility indicators.
The CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal is imminent.