4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - upward.
CCI: 97.2760
The British pound was trading uncontrollably last Friday. It can be said anomalously and illogically. It is the fundamental and macroeconomic background from the UK that is once again showing itself from the worst side. Recall that this is a completely normal situation for the pound in the last year. While many currencies are growing against the US dollar against the background of the infusion of trillions of dollars into the American economy, the pound continues to grow at a stronger pace, completely ignoring its own "macroeconomics" and "foundation". Recall that the pound was calmly growing in price even when there were no more than a couple of months left before Brexit, and there was no smell of a trade agreement between the UK and the EU. The pound continued to hold high positions when Britain was breaking "anti-records" for the number of diseases and deaths from the "coronavirus". The British currency continued to feel just fine even when it became clear that the British economy had contracted quite seriously after the crisis and Brexit, and that the recovery would be long and difficult. We tend to believe that the pound could grow in the last year and a half, but at a slower pace than it did in reality. And now, when it is the UK that is primarily associated with the concept of the "fourth wave of the pandemic", when British GDP in May comes out twice as low as forecasts, when the consequences of Brexit will "be felt" by the country for many years to come, the British pound is starting to grow quite strong again. Last Friday, the quotes of the pound/dollar pair rose by 120 points, although on the same day all published reports in Britain failed. On Monday, the price only managed to roll back a little down, giving hope for the recovery of the US currency, which "suffered undeservedly" on Friday, as growth immediately resumed. Although there were no important macroeconomic statistics and no "foundation" on Monday. It is unlikely that traders reacted in this way to the defeat of the England national team in the EURO 2020 final.
We have already said earlier that we expect the resumption of growth of European currencies against the dollar. However, the pound again shows such movements that it's time to ask each other: "what's going on?". Of course, we hope that the movement will calm down and will be more logical and justified. However, it seems that everything will be the opposite. Meanwhile, the British government is waiting for a concrete decision on July 19. Recall that on July 12, the British Parliament was supposed to meet to decide on the complete abolition of all quarantine restrictions in the country from July 19. Boris Johnson said several times last week that he sees no reason to extend the quarantine restrictions. Although many representatives of the healthcare sector advise the British Prime Minister not to rush with this decision and wait until the entire adult population of the country is vaccinated. However, there are also big doubts that full vaccination of the population will solve the problem with new infections. Recall that it has been repeatedly reported that among those who fell ill and died in Britain from a new strain of "delta" (Indian strain), there are also fully vaccinated Britons. In addition, some EU countries are already tightening quarantine restrictions again and are preparing for the fourth "wave". For example, we are talking about the Netherlands, where Prime Minister Mark Rutte announced new quarantine measures just two weeks after the previous ones were completely lifted. "If we do nothing, the rate of infection will continue to grow. We must stop the spread of the virus at the root. Currently, the incidence rate is growing rapidly, mainly due to the extremely contagious delta strain," Mark Rutte said. They have also already announced preparations for the fourth "wave" in Spain and France. Thus, it was also a good idea for the UK to think about the health of the population, and not about the early lifting of all restrictions and opening up the economy. However, Boris Johnson, obsessed with the ideas of Donald Trump, believes that high rates of vaccination can solve the problem with a new increase in diseases. Although so far the answer to the question "what will happen to the number of diseases after the lifting of all restrictions, if 30-40 thousand Britons get sick every day before the lifting?" looks pretty obvious.
Based on all of the above, we can conclude that whatever the epidemiological and economic situation in the UK, this will not have any negative impact on the pound. The British currency can grow quite calmly against the dollar, even if the fifth "wave" of the epidemic begins in Britain and a new strain appears, which will not be anywhere else. The British economy has been feeling pretty bad for the last year and a half, which does not prevent the British currency from continuing to grow. In just the last year and a half, the pound has grown by 2,800 points, and the maximum correction was about 500 points. Thus, we continue to expect an update of the highs of April 2018 and once again we remind you that it seems that it is the factor of pouring huge sums into the US economy that plays the most important role in the depreciation of the dollar and the growth of the pound and the euro. This week, there will be several reports that you should pay attention to. Today, the US consumer price index will be published, which theoretically can cause a new fall in the US currency, since inflation is now very high in this country, and any high inflation is bad for the national currency.
The average volatility of the GBP/USD pair is currently 99 points per day. For the pound/dollar pair, this value is "average". On Tuesday, July 13, we expect movement inside the channel, limited by the levels of 1.3778 and 1.3976. The upward reversal of the Heiken Ashi indicator signals the continuation of the upward movement.
Nearest support levels:
S1 – 1.3855
S2 – 1.3824
S3 – 1.3794
Nearest resistance levels:
R1 – 1.3885
R2 – 1.3916
R3 – 1.3947
Trading recommendations:
The GBP/USD pair on the 4-hour timeframe abruptly began an upward movement, which may become a new upward trend. Thus, today it is recommended to stay in buy orders with targets of 1.3916 and 1.3947 until the Heiken Ashi indicator turns down. Sell orders should now be opened if the price is fixed below the moving average line, with targets of 1.3778 and 1.3763, and keep them open until the Heiken Ashi turns up.
