4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -34.5888
The British pound continues to ride on a "swing." If on Monday the pound/dollar pair rose by 50-60 points, on Tuesday it managed to fall by 80. Thus, the nature of the pair's movement does not change at all over time. The quotes have spent the last two weeks in a side-channel with a width of about 120 points while continuing to be located near their 3-year highs. The bulls did not experience any discomfort. And, in principle, it is quite rare when the pair is flat while trying to complete an upward trend. Hence, we conclude that the upward trend is far from over. Therefore, traders have the right to count on the further strengthening of the British currency, although there are much less visible reasons for this than for strengthening the dollar. In the article on the euro/dollar, we listed several global reasons why it is the European currency that will continue to rise in price and not the dollar. The exact reasons work for the pound. Another reason in the form of a "speculative factor" was added to them. Thus, there are three global reasons for the further growth of the pound and none for the growth of the dollar. Macroeconomic statistics from the UK and the entire fundamental background from the UK continue to be ignored. And the pound itself is growing by 50-60 percent since the money supply in the United States is inflating before our eyes, not because market participants actively buy it. The COT reports, which we review in our daily articles, clearly show that the big players are not actively buying the pound. And they clearly could not provide it with an increase of 2,800 points over the past 15 months.
Meanwhile, in the UK, vaccination of the population continues at a high rate, and according to the Johns Hopkins website, 65 million vaccinations against the "coronavirus" have already been made. However, researchers and doctors urge not to rush with lifting all remaining quarantine restrictions, which is scheduled for June 21, according to the 4-step plan for getting out of quarantine from Boris Johnson. Health officials draw the government's attention to the "Indian" strain of COVID that continues to spread throughout the country. The number of cases of the disease is growing again. Scientists note that the "Indian" strain is more contagious than the "British" one and more resistant to vaccines. Even those people who have already received one dose of the vaccine are not protected. Thus, doctors urge to speed up the population's vaccination program and not rush with the introduction of the 4th stage of lifting the quarantine. The British Medical Association calls on Boris Johnson to make decisions about easing the quarantine based on data, not dates. According to Chaand Nagpaul, chairman of the British Medical Association, the premature lifting of all restrictions can lead to a new infection surge. It is reported that the "Indian" strain of "coronavirus" has already spread throughout England. It was previously found only in Bolton or Blackburn. Now cases of the disease have appeared even in the most remote areas.
Against this background, it should be recalled that just recently, the former chief adviser to Boris Johnson, Dominic Cummings, made a sharp criticism of the entire government during the pandemic. According to him, the British government has shown itself to be completely incompetent and unable to solve important issues in the face of a serious crisis and pandemic. Cummings blamed the entire cabinet and the Prime Minister himself for the fact that the virus had spread across the UK and infected huge numbers of people, and the national health system was not prepared for such a turn of events. It should also be recalled that Boris Johnson and his actions are now under the close attention of the press and the public. The latest stories about the incomprehensible financing of the renovation of apartments in Downing Street and a Christmas holiday in a villa on a private island worth 15 thousand pounds have attracted attention to Boris Johnson. He recently married for the fourth time. These stories are now being dealt with by the relevant committees of the British Parliament. Thus, if the quarantine is lifted, as planned, on June 21, and in a few weeks Britain will be overwhelmed by a new "wave" of the pandemic, Johnson may not be forgiven. Everyone still remembers the phrase that Boris Johnson allegedly said last summer. He would rather see mountains of corpses than enter a new "lockdown." Whether or not Johnson said this phrase is no longer important. This information is firmly embedded in the minds and is now firmly associated with the British prime minister's name.
Fortunately for the pound, all this information does not make any difference to its exchange rate. Of course, if the UK runs into the third "wave" of the pandemic, it will be very bad, and the rate hike next year can be forgotten. However, as we said in the first paragraph, the important factors now are entirely different. The "Scottish question," the "Northern Ireland problem," disagreements with the European Union, and the lack of an agreement with the EU on the services sector: all these topics now do not put any pressure on the British pound, which in the long term continues to grow calmly in tandem with the dollar, whose economy continues to recover with giant steps, and has no geopolitical problems. The pound/dollar pair can sometimes even be fixed below the moving average, but in most cases, then the upward movement is restored.
The average volatility of the GBP/USD pair is currently 79 points per day. For the pound/dollar pair, this value is "average." On Wednesday, June 2, we expect movement within the channel, limited by the levels of 1.4077 and 1.4235. The reversal of the Heiken Ashi indicator back to the top may signal a new round of upward movement within the new "swing."
Nearest support levels:
S1 – 1.4160
S2 – 1.4130
S3 – 1.4099
Nearest resistance levels:
R1 – 1.4191
R2 – 1.4221
R3 – 1.4252
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 open new buy orders with targets of 1.4221, 1.4252, and 1.4282 in the event of a price rebound from the moving average. Sell orders should be opened if the price is fixed below the moving average line with targets of 1.4130 and 1.4099. The pound sterling now also continues to move in the flat.
