4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -176.4461
The British pound was also trading lower on Tuesday, however, this movement means even less than for the euro/dollar pair. Recall that the euro currency has been adjusted for 2.5 months, and the British pound - only a few weeks, although the previous growth in the pound was much more impressive than in the euro. Thus, another round of falling quotes does not affect the overall upward trend at all. From our point of view, in 2021, the growth of quotes may resume, especially if the US authorities continue to pour trillions of dollars into their economy. Such large-scale actions simply can not affect the exchange rate of the national currency in any way. If such actions did not have any consequences, then all the states of the world without a twinge of conscience would regularly print money in the right quantities and conduct currency interventions to manipulate the exchange rate. However, such actions harm many macroeconomic indicators and are also condemned by the world's central banks. After all, it should be remembered that all the countries of the world are tied to each other through trade. Import-export operations can bring more profit to a particular country if it manipulates the exchange rate. Therefore, such actions are de facto prohibited. It is believed that this is an extreme case and is not a case for advertising to the whole world. Thus, the fall of the pound to the level of 1.3760 does not mean anything yet. At any time, the upward trend for the pair can resume with a new force. Especially if the "speculative" factor continues to persist. However, we also remind traders that any fundamental hypothesis requires confirmation. Roughly speaking, if we assume that the US dollar will become cheaper in 2021 based on certain factors, this does not mean that we need to sell the dollar right now. You need to wait for technical confirmations, trend formation, and signals, and then trade following the fundamental background.
And in the UK, meanwhile, all the attention is on vaccination and the coronavirus. The epidemic seems to have been extinguished, however, the country's Prime Minister Boris Johnson fears that the third "wave" of the pandemic in the European Union will affect Britain. The British Prime Minister believes that if the neighbors begin a full-scale third "wave", then the number of infections in the Foggy Albion will inevitably begin to grow. At this time, 5-6 thousand new infections are recorded daily in the UK, and this number continues to decline. But in the leading countries of the European Union, the number of daily recorded infections is growing again. In France, for example, the day before yesterday, 80,000 new infections were recorded, with an absolute maximum at the height of the second "wave" of just over 100,000. Thus, potentially the third wave for the EU countries may be even stronger than the second. In Italy, there is also an increase in diseases. Every day-25-26 thousand new patients. In Spain, so far everything is relatively calm, the increase in the incidence is not noted. In Germany, the growth is small. Thus, for all European countries, the issue of vaccines, which are sorely lacking, remains in the first place in terms of importance. So it is not enough that the EU authorities can ban the export of vaccines from the EU, in particular, to the UK, than to start a new round of conflict with the Kingdom. So far, all this is just talk and fears. Boris Johnson expressed hope that the leadership of the European Union will not allow blocking the supply of vaccines to Britain. Although in general, Brussels can block any export of vaccines. In particular, we are now talking about the vaccines of AstraZeneca, which does not fulfill its supply obligations to the EU, but at the same time sends the vaccine to Albion, according to contracts with London. However, Boris Johnson assured that the EU leaders do not intend to arrange a "blockade" and start a "war on vaccines". Some senior EU officials, however, believe that the likelihood of a ban on the export of AstraZeneca vaccines is very high. The reason for this may be the high level of criticism of the EU authorities by the member states of the bloc for the failed vaccination of Europeans. But so far, the parties have not yet embarked on the path of open conflict.
As for the prospects of the British pound in the coming weeks, they are very vague, as the US currency may continue a banal technical correction against the annual upward trend. It can also be an acceleration before a new upward trend. As we already said in the article on the euro/dollar, one currency cannot constantly rise in price in a pair with another, even if absolutely all factors speak in favor of this. Thus, for the time being, we are inclined to continue the downward movement, which should be worked out on the 4-hour timeframe. However, we should pay attention to the instability of this movement, not its outright weakness, and the fact that there are now several global factors that can put the strongest pressure on the US dollar at any time.
Separately, I would like to say that the US currency may become more expensive for some time simply based on a higher rate of recovery in the US economy. This factor has taken place in recent months, especially in the winter two quarters, when the EU and the UK were introduced "lockdown", in contrast to the States. However, as we have already said, the factor of pouring huge amounts of money into the US economy and dumping "helicopter money" plays a big role in the dollar. Thus, we believe that even if the US economy continues to recover at its current pace, it will be more important how many more trillions of dollars will be poured into the US economy.
The average volatility of the GBP/USD pair is currently 106 points per day. For the pound/dollar pair, this value is "average". On Tuesday, March 24, therefore, we expect movement within the channel, limited by the levels of 1.3653 and 1.3865. The reversal of the Heiken Ashi indicator back to the top can signal a new round of upward movement.
Nearest support levels:
S1 – 1.3763
S2 – 1.3733
Nearest resistance levels:
R1 – 1.3794
R2 – 1.3824
R3 – 1.3855
Trading recommendations:
The GBP/USD pair has started a new round of downward movement on the 4-hour timeframe. Thus, today it is recommended to stay in the sell orders with the targets of 1.3733 and 1.3653 until the Heiken Ashi indicator turns up. It is recommended to consider buy orders with targets of 1.3916 and 1.3977 if the price is fixed above the moving average.
