4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - downward.
CCI: -228.0870
The British pound fell yesterday after the results of the Bank of England meeting were summed up. In principle, this is what we talked about a day earlier when we warned that the expansion of the quantitative stimulus program is a "dovish" measure that means easing monetary policy. And such a step is almost always accompanied by a fall in the national currency. However, we were not sure that the British currency would continue to fall due to this measure of the British regulator. After all, in recent months, market participants often ignore macroeconomic statistics. However, this time, traders could not pass by such an important event.
If we look at the Central Bank's meeting in more detail, the regulator is still shaping monetary policy by achieving the 2% inflation target. All members of the monetary committee voted to keep the base rate at the same level of 0.1%. The Bank of England says that after a 20% drop in GDP in April, this indicator has begun to recover. The outlook for the British and global economy is uncertain. Everything will depend on the results of the fight against the "coronavirus" epidemic. The Bank of England also said that it is ready to ease monetary policy again if the situation requires it. From our point of view, absolutely "dovish" results.
Meanwhile, a new political scandal related to Donald Trump is breaking out in America. Former national security adviser John Bolton, who was fired by Trump in September 2019, has written a book. This book contains a lot of information compromising the current president, and the presidential administration has already banned the distribution of this book in the public domain. However, several copies of the book have already fallen into the hands of journalists, so the most interesting parts of the book have already been published in relevant articles. One of Bolton's most high-profile statements is that the current US President asked Chinese leader Xi Jinping to help him win the 2020 election in exchange for signing new trade agreements. Also, Bolton reports that the Chinese leader in a personal meeting with Trump told him about concentration camps for Uighur Muslims, to which Trump replied that he fully approves of it. Also, the former adviser to the president tells in his book about a lot of meetings and conversations between Trump and the leaders of Japan, North Korea, and the UK, in which the US president showed himself to be completely ignorant, each decision of which was aimed at increasing his popularity and reflected a desire to remain in power for a second term. Bolton also claims that during the impeachment procedure, the Democrats incorrectly built an accusatory line. According to Bolton, Trump should have left office not because of pressure on Ukraine, but because of a series of wrong foreign policy decisions. Trump himself has also already spoken out about the yet-to-be-released book, accusing Bolton of divulging classified information.
Well, the political crisis in the US continues to gain momentum. However, at this time, it does not have any impact on the US dollar, however, it is extremely important for both America and the dollar. We have repeatedly said that a lot will depend on who becomes the next US President. Returning to the matters of the moment and the dynamics of the pound/dollar pair, we can say the following. There are no publications scheduled for the last trading day of the week in the UK and the US. However, there is no doubt that soon, traders will receive new information on the subject of John Bolton's book, Trump's reaction to it, as well as China's reaction to the US law supporting Uighurs. However, the GBP/USD pair is likely to continue its decline anyway, as it has previously grown quite strongly. At the same time, we continue to recommend paying special attention to technical indicators. For example, a reversal of the Heiken Ashi indicator to the top will signal a round of upward correction, which can then develop into a full-fledged upward trend. The main thing is not to trade against the trend.
The average volatility of the GBP/USD pair continues to remain stable and is currently 148 points. For the pound/dollar pair, this indicator is "high". On Friday, June 19, thus, we expect movement within the channel, limited by the levels of 1.2232 and 1.2528. A reversal of the Heiken Ashi indicator upward will indicate a possible new round of upward movement.
Nearest support levels:
S1 – 1.2390
S2 – 1.2329
S3 – 1.2268
Nearest resistance levels:
R1 – 1.2451
R2 – 1.2512
R3 – 1.2573
Trading recommendations:
The GBP/USD pair continues its downward movement on the 4-hour timeframe. Thus, today it is recommended to continue trading the pound/dollar pair for a decrease with the goals of 1.2329 and 1.2268. It is recommended to buy the pound/dollar pair not before fixing traders above the moving average, with the first goals of 1.2634 and 1.2695.
