FX.co ★ Overview of the GBP/USD pair. January 6. Scotland and Northern Ireland will seek secession from the United Kingdom. The third "lockdown" in the UK.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: 47.2026

The British pound, paired with the US currency, continues to trade near 2.5-year highs. Thus, so far, we can not even conclude the correction. What we saw on January 5, pulls the maximum on the rollback. The pair went down about 100 points. Thus, the upward movement can be resumed at any time. The technical picture suggests that the upward trend continues. Market participants simply continue to ignore all the really important factors and continue to buy the pound sterling. Of course, there is a possibility that it is not ordinary traders who make purchases of the British currency, which leads to its serious strengthening. No one canceled the actions of major players, central banks, as well as the Fed itself, which quite legitimately pumps the economy with freshly printed dollars. Thus, although we consider the current strengthening of the pound to be speculative and completely unfounded, there is no denying the presence of a strong upward trend. Therefore, you need to continue to trade according to the trend, and not against it.

Even though the pound sterling continues to rise in price and you can even conclude based on this growth that everything is fine in the UK, not all experts and publications believe that this is the case. In reality, we have not yet encountered the view that Britain will have a happy and majestic future outside the EU. Unless, of course, you count the opinion of Boris Johnson. Many world experts, economists, and political scientists believe that the British economy will continue to feel the consequences of Brexit for a long time. Well, I don't even want to talk about a pandemic. It is in the UK that the third lockdown is being introduced. However, in addition to those reasons that lie on the surface, there are also more hidden and not obvious factors. For example, geopolitical ones. We have repeatedly talked about Scotland in the last year, which has firmly set out to secede from the United Kingdom. Needless to say, the losses of London associated with Brexit may seem like flowers compared to the possible loss of Scotland. On May 6, elections will be held in Scotland, as a result of which the strength and influence of the Scottish National Party can be strengthened in Parliament. Its head Nicola Sturgeon, who is the country's first minister, believes that she must return the country to the EU. Sturgeon has repeatedly said that the people of Scotland did not choose to leave the EU, this choice was imposed on them by London. Thus, the main slogan of the election program of Sturgeon and her party considers a return to the EU and exit from the UK. According to Sturgeon, for 50 years, Scotland has benefited from close cooperation with the European Union, in particular from freedom of movement and more than 230 thousand people across Europe have made Scotland their home. "Scotland doesn't want that to change," says Sturgeon. Also, the First Minister of Scotland said that Edinburgh intends to get the right to a referendum legally and legitimately. It's true, without official permission from London, it is impossible. However, only recent years have repeatedly shown and proved that everything is possible. The referendum has become fashionable in the last decade and a lot of geopolitical issues are solved with the help of a referendum. Thus, Edinburgh may also try to hold a not-quite-legal referendum. And if its results show that the majority of the country's citizens are "for" leaving Britain, then Sturgeon will have a very significant trump card in negotiations with London. So far, the last referendum, by the way, sanctioned by London, held in 2014, showed that the majority of Scots do not want to leave Britain. And this is now the main trump card of London in the negotiations.

Also, many experts believe that attempts to separate from England will be carried out by Northern Ireland. Maybe not right now, maybe in a few years. The problem is that Northern Ireland will always be drawn to Ireland, which has remained in the EU. No matter how friendly and "soft" the border on the island of Ireland is, it is still a border. On the island of Ireland, there was a confrontation or even a war for decades, which was only extinguished in 1998 thanks to the Belfast Agreement. Many experts believe that the tension on the island will now increase again.

So no matter how hard we try to find the factors that will help Britain "get off its knees", we can't do it. No matter which way you look, Britain may face new challenges everywhere, and it has already faced some. Thus, if we consider the prospects for the British pound purely from an economic and geopolitical point of view, then nothing rosy is still visible. Nevertheless, the pound continues to grow and does so very confidently. Market participants continue to ignore the fact that the British economy will almost certainly contract in the fourth quarter of 2020 and the first quarter of 2021, unlike the American one. This is already indicated by official GDP forecasts for the specified period. According to forecasts, the British economy will lose 2% in the fourth quarter, and 2.6% in the first quarter. The US economy is forecast to grow by 3.4% in the fourth quarter and 1.5% in the first quarter. But even this comparison is now not taken into account by traders. The US dollar can't even adjust normally. Thus, "technique" now remains a priority for traders.

The average volatility of the GBP/USD pair is currently 109 points per day. For the pound/dollar pair, this value is "high". On Wednesday, January 6, thus, we expect movement inside the channel, limited by the levels of 1.3511 and 1.3729. The reversal of the Heiken Ashi indicator downwards signals a new round of downward movement within the "swing".

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 on the 4-hour timeframe is now in a new round of upward movement after a rebound from the moving average. Thus, today it is recommended to stay in long positions with targets of 1.3672 and 1.3733 until the Heiken Ashi indicator turns down. It is recommended to trade the pair down again with the targets of 1.3550 and 1.3511 if the price is fixed below the moving average line. In general, the pair is now continuing to "swing".