4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -74.3391
The British pound paired with the US dollar continues to be in a "swing" mode for more than three weeks. And here, absolutely nothing has changed recently. It did not change on Wednesday, as the pound/dollar pair continued to remain inside the side channel of 1.4100-1.4220 while being located exactly in the middle of this range. At this time, it is not even a question of quotes at least approaching the channel boundaries, for example, forming signals for a rebound. The "swing" and the flat are visible. Thus, market participants and the euro/dollar pair continue to wait for some momentum to resume the trend movement. In principle, all the theses listed in the article on the euro/dollar are also relevant for the pound/dollar pair. Simply because at this time, it is the US currency that is depreciating. The Fed and the US government's actions continue to exert the strongest pressure on the US currency. And, if we thought that the current state of things could last for several more years, then economists from the United States believe that this state of things can now be observed for decades. We will not make such long-term forecasts. However, we recall that the pound and the euro recently ended (presumably) global downward trends. Usually, the global trend takes 8-12 years.
Consequently, the US dollar may continue to be under pressure for the next five to six years due to technical reasons and global fundamentals. Thus, the situation does not change in any way, either globally or in the short term. The only thing that can be expected from the pound/dollar today and tomorrow is a local reaction to the US inflation report and the UK GDP data, and the speech of the Bank of England Chairman Andrew Bailey.
Meanwhile, former President of the United States Donald Trump gave a speech in which he said that China should pay the United States for the coronavirus pandemic. According to Trump, the sum of 10 trillion dollars will be quite enough. "We demand reparations from the Chinese Communist Party. China must pay for what it has done," Trump said at the Republican convention. According to Trump, it is not only the United States that has suffered from China's actions or inaction. All countries that owe China money should refuse to pay their debts, and the US should issue a bill for $ 10 trillion. Trump also said that he was right when he said that the virus was artificially created in a Chinese laboratory. Trump also said that it is necessary to introduce 100% duties on all goods imported from China. In addition, the former US president criticized Joe Biden for refusing to impose sanctions on the Nord Stream-2 gas pipeline. "Joe Biden just put America last," Trump said. He also recalled that he had excellent relations with Russian President Vladimir Putin, but at the same time, he was the toughest towards Russia. The former US president also hinted that he is ready to help the Republicans in the 2022 congressional elections and said that he is looking forward to 2024 when the next presidential elections will be held in America.
At the same time, the current US President Joe Biden signed a decree according to which American investors will be prohibited from buying shares of 59 Chinese companies that "undermine US national security." This list includes Huawei, various communications companies, and companies associated with the military-industrial complex of China. The ban comes into force on August 2. Thus, as we can see, the confrontation between China and the United States continues even with the coming to power of Democrat Biden, who hoped that he would improve relations with the Middle Kingdom.
As for the events in the UK, now everything revolves around a possible new conflict with the European Union. Recall that Brussels is ready to "respond harshly" to non-compliance with the "Northern Ireland protocol" by London. London itself calls on Brussels to sit down at the negotiating table and review this protocol. In addition, Britain wants to conclude a new trade agreement with the European Union, which will now formalize relations in the service sector, especially in the financial services sector. However, the EU member states do not see much sense in this yet, since London, in their opinion, does not fulfill all the points of the already concluded agreement. Talks between London and Brussels are due to take place this week.
The pound, meanwhile, continues to stand still and wait. I don't know what to expect. One would assume that the statistics from the UK on Friday will be able to have a beneficial effect on the pound. However, we believe that the maximum reaction will be local, within the same side-channel of 1.4100-1.4220. Thus, most likely, the flat will end as usual. Just out of the blue, the quotes will break through one of the channel boundaries on a specific day, which will lead to the beginning of a new trend. We are still inclined to believe that this will be a continuation of the upward trend. However, it is impossible to say this with certainty. As long as the flat remains, we recommend paying more attention to the lower timeframes since they can be used to trade from different levels and lines.
The average volatility of the GBP/USD pair is currently 93 points per day. For the pound/dollar pair, this value is "average." On Thursday, June 10, we expect movement within the channel, limited by the levels of 1.4021 and 1.4207. The reversal of the Heiken Ashi indicator back up signals a new round of upward movement within the "swing."
Nearest support levels:
S1 – 1.4099
S2 – 1.4069
S3 – 1.4038
Nearest resistance levels:
R1 – 1.4130
R2 – 1.4160
R3 – 1.4191
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 1.4099 and 1.4069 until the Heiken Ashi indicator turns up. Buy orders should be opened in the event of a reversal of the Heiken Ashi indicator upward with the targets of 1.4191 and 1.4207. The pound is now continuing to move in an absolute flat.
