FX.co ★ Overview of the GBP/USD pair. March 9. The Belfast Agreement of 1998 could collapse at any moment.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward

Moving average (20; smoothed) - downward.

CCI: -83.2816

The British currency, as we said in the next article on the euro/dollar, also continued to move down in the last week and a half. However, the intensity of this movement is inferior to the euro/dollar pair. Thus, we are forced to draw the attention of traders to the fact that the British pound is most likely still affected by the "speculative factor". It is unfortunate, however, it seems that after the strong growth of the British currency in the last 12 months, traders are again "aiming" to buy this currency. If the euro currency at least corrected in 2021 (and continues to do so), then the pound sterling is adjusted only for a week and a half and is still located near its 2.5-year highs. Of course, from a technical point of view, there is a clear downward trend at this time. Although not as clear as in the euro. Both linear regression channels are directed upward, so the current fall status is still corrective. But from a fundamental point of view, everything is still very difficult. From time to time, we list all the factors from the UK that would normally have a major impact on the pound. There is not a single positive factor in this list that could support the British currency. We have repeatedly said that the British economy is likely to contract in the fourth quarter of 2020 and the first quarter of 2021, and the Bank of England has long been walking on the edge of the abyss in the issue of reducing the key rate. The agreement with the European Union, which was concluded literally on its knees at the New Year's table, as it turned out a little later, does not contain a single point that would define or regulate the relationship between the European Union and the Kingdom in the field of services and, most importantly, in the field of financial services. But for the Kingdom, this area is of the greatest importance, which determines the lion's share of GDP. As a result, at the beginning of 2021, the British have already received a pile of new and fresh problems. The European Union has blocked the access of British financial companies to its market and is not going to open its doors to them yet. And the Association of Road Carriers of Britain announced an unprecedented reduction in trade with the European Union. Brussels, however, is understandable. The UK has left the EU, but at the same time wants to continue to enjoy all the privileges of membership in the Alliance. For the European Union, its own companies are now more important than British ones. Naturally, the European authorities have cut off the oxygen to companies from the UK, and also use this moment as a lever of pressure on London in various controversial situations. And there have been a lot of controversial situations in recent months alone. Recall that Boris Johnson, even when there was no trade agreement, began to bluff and blackmail Brussels with possible violations of some points of the Brexit agreement, if the European Union is not more compliant in the negotiations. Earlier this year, there were already problems on the border between Northern Ireland and Ireland due to the supply of a vaccine against the "coronavirus". Then the EU authorities unexpectedly introduced border controls at the border to prevent unauthorized exports of vaccines from the European Union, using Article 16, which allows the suspension of the entire protocol if there are "serious economic, social or environmental difficulties". And it is this article that both sides are now happy to use in all uncomfortable situations.

The biggest problem in the "post-Brexit" relationship between the Kingdom and the Alliance from the very beginning was the regime that would operate on the island of Ireland. And it turns out that Article 16 allows you to almost completely cancel the operation of this regime unilaterally. This is what the UK did when it considered that British companies had not yet fully adapted to the new border between Northern Ireland and Ireland, extending the grace period of import rules for food products to Northern Ireland. Brussels believes that this is a violation of the Brexit agreement and now intends to sue. And Northern Ireland's nationalist paramilitaries have said they are temporarily refusing to adhere to the 1998 Belfast Agreement that ended violence and war on the island of Ireland for almost 30 years. In their opinion, the Brexit agreement makes trade between Northern Ireland and the UK too difficult. Also, the ultra-left forces believe that neither Brussels nor London adhere to the exact agreement that they concluded, because of which the Northern Irish people suffer. The Irish nationalists are demanding that their rights be restored and that the protocol be changed so that there can be unhindered and unrestricted trade between Northern Ireland and Great Britain. So, potentially, Britain has a very serious problem in the form of a new conflict on the island of Ireland. Let's add to this Scotland's insistence on leaving the UK and holding a new independence referendum, and we have very big problems that London may face in the foreseeable future. Based on all of the above, we continue to observe with great surprise the growth of the British currency (in the long term). Of course, the factor of pumping the American economy with money has not been canceled, and on its basis, the pound could and should have grown, but traders clearly take into account only this one factor, and they simply turn a blind eye to all British problems of various kinds.

The average volatility of the GBP/USD pair is currently 107 points per day. For the pound/dollar pair, this value is "high". On Tuesday, March 9, thus, we expect movement within the channel, limited by the levels of 1.3732 and 1.3946. A reversal of the Heiken Ashi indicator to the top will signal a new round of corrective movement.

Nearest support levels:

S1 – 1.3794

S2 – 1.3733

S3 – 1.3672

Nearest resistance levels:

R1 – 1.3855

R2 – 1.3916

R3 – 1.3977

Trading recommendations:

The GBP/USD pair continues its downward movement on the 4-hour timeframe. Thus, today it is recommended to stay in the sell orders with the targets of 1.3794 and 1.3733 until the Heiken Ashi indicator turns up. It is recommended to consider buy orders with targets of 1.3977 and 1.4038 if the price is fixed above the moving average line.