24-hour timeframe
The British pound also continued to trade throughout the past week within the 400-point wide side channel. The GBP/USD pair also fell to its lower border (but failed to work it out clearly) and turned up. Thus, now traders can expect an upward movement to the upper line of the side channel, which runs around the level of 1.2640. At the same time, traders continue to ignore almost all the information that comes to their disposal, and at the same time, they need new grounds for forming a new trend. Volatility remains quite high but at the same time "normal" for the British currency. There is no need to talk about a new wave of panic now, and this is good.
There is very little news from the UK right now. By and large, they all relate to data on the "coronavirus" epidemic. And here, we can conclude that Boris Johnson and his Cabinet failed the preparation and the fight against the pandemic itself as first-class as his friend Donald Trump. If the United States leads the world in the number of infected and dead, then the UK is the second in the world in the number of "deaths" and is confidently approaching the second place in the world in the number of diseases. At the moment, 212 cases of infection have been officially registered in the Foggy Albion. In Italy and Spain, the growth rate of infection is slowing down and absolute values are 217,000 and 223,000. Thus, Britain can catch up with the southern EU countries within a few days. The number of new infections over the last day is about 4,000, which does not allow representatives of the health sector to conclude about the decline of the pandemic. At the same time, the UK does not want to lag behind the entire civilized world and is also going to start relaxing quarantine measures. It is expected that the quarantine will be eased from May 11, and Boris Johnson will address the nation with a detailed plan for this process. The British government believes that the country has passed the peak of the epidemic and now needs to focus on testing as many people as possible and preventing new outbreaks. However, according to doctors, it is too early to remove "lockdown". And this, by the way, also applies to America. It seems that a frivolous attitude to the epidemic at the very beginning led Britain and the United States to the first two places in the world for the COVID-2019 virus. Now, too much haste to remove the quarantine may lead to these two countries being the first to start the second wave of the epidemic. We certainly hope that this will not happen, but we consider the steps of the British and American governments to be too hasty.
At the same time, on May 11, negotiations will resume on the future relationship between the UK and the European Union after the end of the "transition period". Recall that the first round of negotiations ended with nothing. The parties failed to reach an agreement on any issues. Moreover, the head of the EU negotiating group, Michel Barnier, accused the British colleagues of delaying negotiations and the lack of alternative proposals on the most pressing issues. The second round of negotiations will last a week, just like the first. Most experts agree that the lack of a deal with the European Union will be another serious blow to the economy for the UK since London will have to trade with the European Union under WTO rules in this case. However, Boris Johnson does not seem to be bothered by this fact at all. He has repeatedly stated that there will be no extension of the "transition period" and repeated this recently again. Even the coronavirus epidemic did not force the British government to change its plans.
Thus, the prospects for the British pound remain quite vague. However, now, thanks to the "coronavirus", all countries are equal. If earlier rates in the United States were much higher and the economy is much stronger, now both the British and American economies are falling, and rates have been reduced by both Central banks to almost zero. Thus, the US dollar does not have a special advantage right now. The answers to questions about what awaits the pound/dollar currency pair in the near future depend only on how the further fight against the "coronavirus" will proceed.
As before, we believe that the main factors affecting the mood of traders and the movement of the currency pair remain technical. Thus, they are the ones that market participants need to pay special attention to. Now, as we have already said, trading takes place inside the side channel and until the price leaves it, you should not count on the formation of a new trend.
Trading recommendations:
On the 24-hour timeframe, the pound/dollar pair continues to adjust against the upward trend. The side channel is clearly visible and the rebound from its lower border allows you to consider long positions with a target of 1.2640. The Ichimoku indicator may generate false signals under current conditions. This applies to both 24-hour and 4-hour timeframes.
Explanation of the illustrations:
Ichimoku Indicator:
Tenkan-sen - red line.
Kijun-sen - blue line.
Senkou span A - light brown dotted line.
Senkou span B - light purple dotted line.
Chinkou span - green line.
Bollinger bands indicator - 3 yellow lines.
MACD indicator - red line and a histogram with white bars in the indicator window.
Support/resistance levels - classic red and gray dotted lines with price symbols.
Pivot level - yellow solid line.
Volatility levels - solid red lines.
Possible variants of the price movement:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com