4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - upward.
CCI: 49.4629
The British pound sterling stopped growing against the US currency during the last trading day, but at the same time, it did not begin to adjust. The volatility of the pound/dollar pair has also significantly decreased in recent days, despite a confident and almost recoilless upward movement. Thus, the pound continues to remain near its local and 2.5-year highs and still cannot even form a tangible correction. Given the fact that there was no rebound as such from the Murray level of "3/8"-1.3855, the upward movement is likely to continue. In any case, we have a technical picture of the 4-hour timeframe as well as the hourly one. Trading is still recommended, putting technical factors in the first place. After all, by and large, the next round of growth of the British currency cannot be explained by anything other than the same factor of pouring trillions of dollars into the American economy. As in the case of the ECB, the Bank of England also stimulates its economy, but not to the same extent and scale. The British don't hand out thousands of pounds for nothing. Thus, despite the fall of the British economy in the fourth quarter of 2020, the fall in the first quarter of 2021, Brexit, the deterioration of the business climate in the Foggy Albion, the decline in investment attractiveness, the depressing state of the service sector, the continuing third "lockdown" and so on, the British pound continues to grow.
A day earlier, in addition to the speech of Christine Lagarde, there was also a speech by the head of the Federal Reserve Jerome Powell. The chairman of the US Central Bank expressed his view that it is necessary to stimulate the labor market by all means to recover, and not to slide back into recession. Powell sees the main recipe for overcoming the crisis in the return of Americans to their jobs. This is especially true for members of racial minorities and low-paid workers. "Given the number of people who have lost their jobs and the fact that many will find it difficult to find a job in a post-pandemic economy, it will take more than monetary policy support to achieve and maintain maximum employment. It will require symbiosis and interaction on the part of the authorities, the private sector, and the US population," Powell said. The Fed chairman also compared the current situation in the United States with the post-war period, when the government created jobs at a high rate for those who returned from the war. Powell called the task of the government to provide guarantees to every American who wants to work that he will get it. Also, the head of the Federal Reserve once again called on Congress not to delay the adoption of a new package of stimulus measures and to ensure investment in the economy as quickly as possible. Powell noted that the Fed will continue to do everything to ensure that the labor market fully recovered as soon as possible, but noted that the Fed's efforts alone may not be enough. Despite the official statistics, which speak of 6.3% unemployment, Powell is confident that the real level is not less than 10%.
On the same day, the governor of the Bank of England, Andrew Bailey, also made a speech. However, Mr. Bailey did not address the issues of monetary policy and the economy, which made his speech extremely uninteresting for currency traders. However, the BA Chairman called on the European Union to treat the UK on the same terms as its other partners. According to the governor of the central bank, the EU demands more from Britain than from other countries with which it does business. The British financial sector has been separated from the European market since January 1, 2020. The trade agreement reached by Michel Barnier and David Frost does not include any agreements related to the financial sector and the services sector. Thus, these areas will have to learn to live in the new realities on their own.
What is the result? This week, there were speeches by the heads of the central banks of the UK, the EU, and the US. All managers believe that the process of economic recovery will be long and difficult, and will require serious assistance from the government and the citizens themselves. Everyone attaches great importance to financial injections into the economy and the recovery of the labor market. However, someone talks about it constantly and openly, someone tries to focus on other things. But in general, the rhetoric of Andrew Bailey, Christine Lagarde, and Jerome Powell is what market participants expected to hear. All three performances did not affect the movement of the two main pairs. Rather, on the contrary, there has been a clear drop in volatility in recent days.
Meanwhile, in the United States, the impeachment proceedings of the former US President Donald Trump is continuing and a judicial investigation has also been initiated against him in the state of Georgia. Earlier, we wrote that in December 2020, Trump called the Secretary of State and strongly hinted at possible criminal prosecution if he did not cancel the results of the election, which Joe Biden won. Trump urged his interlocutor to "find him the missing votes". Now the Prosecutor of the state of Georgia asked to keep all the documents that are related to this call in connection with a criminal investigation. Thus, Trump is no longer the president of the country for three weeks, and lawsuits continue to be brought against him and proceedings are initiated for the cases that he managed to create while still being president. Many experts and political analysts believe that this is only the beginning and Trump will have to answer for all his illegal actions. Moreover, now he will be tried no longer as a president, but as an ordinary person who does not have any immunity or privileges.
The average volatility of the GBP/USD pair is currently 67 points per day. For the pound/dollar pair, this value is "average". On Friday, February 12, thus, we expect movement within the channel, limited by the levels of 1.3742 and 1.3876. A reversal of the Heiken Ashi indicator to the top will signal a possible resumption of the upward 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 started a weak correction on the 4-hour timeframe. Thus, today it is recommended to open new long positions with targets of 1.3855 and 1.3876 if the Heiken Ashi indicator turns up. It is recommended to consider sell orders with a target of 1.3672 if the price is fixed below the moving average line.
