4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: -76.0282

The pound also fell against the US currency at the end of last week, which caused a sense of restoration of correlation between the two main pairs. However, if you look at the graphs of these pairs now, it becomes clear that there can be no question of any correlation. The pound sterling fell at the end of last week, as well as the euro currency. Now the pound sterling has once again updated its 2.5-year highs, and the euro currency has been correcting against the dollar for two months. On Wednesday, March 3, the euro currency resumed falling in the second half of the day, however, the pound sterling remained in place at this time and did not move down one iota. Thus, although global fundamental factors are now coming from overseas, that is, they should equally affect the movement of all pairs with the US dollar, yet the pound and the euro move differently, and therefore the factors that affect these currencies are different. In principle, you do not need to guess for a long time to understand: the euro currency moves much more logically, from the point of view of technology. After a two-month increase of 800 points, a two-month correction of 400 points followed. Everything is logical and clear. The pound has been rising for five months. During this time alone, there was not a single normal downward correction. The pair first traded in the "high-volatility swing" mode to the "just swing" mode, then increased the upward movement for no reason at all, and corrections with pullbacks generally became a rare phenomenon. Thus, the pound sterling remains under the power of certain "own" factors. But what could be the factors that, despite the depressing state of the British economy, continue to provoke the strengthening of the British currency? We have already drawn the attention of traders that over the past 11 months, the pound has grown by about the same amount as it fell in the previous four "Brexit" years. That is, for four years, when there were really serious fundamental factors for the fall of the pound. In contrast to the last 11 months, when the pound rose in price simply on the factor of the increase in the money supply in the US and, probably, the speculative factor. Thus, nothing has changed in recent weeks. Traders are still unwilling to get rid of the British currency like bitcoin, and the United States is going to increase its money supply even more. Therefore, two presumptive factors that brought the pound to the level of 1.4230 remain in force. All the British factors also remain in force, but still do not interest market participants. The British economy is suffering from two winter "lockdowns", from Brexit, from growing debts, from the need to support businesses and British citizens. However, all this does not negatively affect the exchange rate of the British pound, so the British "foundation" is now unimportant.

Even such an important event as the publication of the draft budget for the 2021 financial year and the speech of the British Finance Minister Rishi Sunak did not become something special for the markets. It seems that Sunak speaks every day, and the budget is a very ordinary document and will not have a direct relationship to the state of the economy of an entire country for a whole year. It should be noted, however, that the draft budget did not contain anything supernatural. Markets feared that the UK government would refuse to continue supporting businesses and people who lost their jobs, which would certainly harm the pace of economic recovery in 2021, which is already not the highest. However, a day earlier, Rishi Sunak assured that the government will extend the program, which provides for payments to those who have lost their jobs up to 80% of their wages until the end of September, at least. However, the maximum amount that can be received by one citizen is 2.5 thousand pounds. Sunak also noted that about 600,000 more citizens will also receive assistance from the state, although they have not previously received it. In principle, Rishi Sunak's suggestions are logical. Earlier, Boris Johnson said that by September, the entire adult population of the UK can be vaccinated. Thus, it is in September that the authorities of the country are betting. It is by September that the country must completely defeat the "coronavirus" and return to normal life. Accordingly, programs to support the population and business will be in effect for this month. At the same time, of course, the country will further increase its public debt. It will also have to address the issue of the budget deficit, which is unlikely to be "closed" with the help of tax increases. According to various estimates of experts, the deficit in 2021 will be about 80 billion pounds. A country that has lost a lot of blood will not be able to cope with the tax increase right now. Thus, the missing money will simply be printed or raised at the expense of government securities. However, this is normal when the debts of states grow in times of crisis.

Well, the pound sterling in the near future can continue its illogical growth. Simply because traders are now paying attention to the speculative factor and the increase in the money supply in the United States. If these factors continue to have 90% of the impact on the pound/dollar pair, then you should not even guess how events will develop in 2021. By the way, the pound/dollar pair clearly shows how much traders are not interested in increasing the yield of American treasuries. The US dollar strengthened for several days, which is a banal technical pullback. Treasuries showed strong growth throughout February.

The average volatility of the GBP/USD pair is currently 124 points per day. For the pound/dollar pair, this value is "high". On Thursday, March 4, thus, we expect movement within the channel, limited by the levels of 1.3844 and 1.4092. A reversal of the Heiken Ashi indicator back down will signal a new round of downward movement.

Nearest support levels:

S1 – 1.3916

S2 – 1.3855

S3 – 1.3794

Nearest resistance levels:

R1 – 1.3977

R2 – 1.4038

R3 – 1.4099

Trading Recommendations:

The GBP/USD pair on the 4-hour timeframe is a new round of upward correction. Thus, today it is recommended to open new sell orders with targets of 1.3916 and 1.3855 in the event of a price rebound from the moving average line. It is recommended to consider buy orders with targets of 1.4038 and 1.4092 if the price is fixed above the moving average line.