4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -65.8594
The British pound sterling spent the fourth trading day of the week in fairly calm trading without serious movements. Most of the trading took place between the Murray levels of "0/8" and "1/8". Thus, the bears have not yet managed to overcome the level of 1.2700, and a correction may begin. At the same time, the British currency still has no reason to grow. There is no positive news from overseas. Thus, the reasons for the possible strengthening of the British currency may be purely technical. But the problems in the UK are becoming more and more every day. This is just the case when you do not know which side to approach, and from which side to start. In principle, from which side you do not approach, you can immediately see a huge mass of problems. The most interesting thing is that similar problems are present in other countries of the world and the European Union. But it is probably in times of crisis that the main qualities of government are revealed. Where it is incompetent or engaged in non-governmental issues, and the result is a greater number of problems.
The UK had one of the highest numbers of infections among European countries during the first "wave". The highest number of deaths from COVID-2019. Its economy shrank by a record 20% in the second quarter, and even Italy, Spain, and Portugal, which were also very seriously affected by the pandemic, fell short of this figure. Now the second "wave" of the epidemic has begun in the Foggy Albion, and already in its first days, it became clear that it will be much stronger and "tougher" than the first. First, the number of daily illnesses reached maximum levels in the spring at the very beginning of the campaign. Secondly, if in the spring many governments were frankly afraid of the epidemic and we're not afraid to introduce "lockdowns" and strict quarantine measures, now almost all world leaders say that "lockdown" is the most extreme measure since after it the economy is in complete decline, which in terms of consequences can be even more serious than the consequences of the epidemic. Therefore, there is no doubt that no matter how tough the second and third waves of the pandemic were, "lockdowns" will now be introduced only as a last resort. This means that potentially the number of victims from the "coronavirus" may be much higher than in the first "wave". And this will inevitably lead to a reduction in the economy. As we have said many times, even if "lockdown" is not introduced, it does not mean that people live their normal lives. Their social and economic activity is falling sharply, business activity is falling, and the unemployment rate is rising, which puts pressure on the country's budget. That is, there will be no such option that the "lockdown" is not introduced, those who are ill are treated, and everyone else lives a normal life. This is also understood by Boris Johnson, who seems to have set his only goal a year ago to complete Brexit, but fate threw him a rather difficult test, for which he was objectively not ready. Now in the UK, bars, and restaurants will be closed from 10 pm to 5 am, groups of more than 15 people are banned, stadiums will continue to remain empty, and masks will be mandatory to wear on public transport and in any public places. "In the last two weeks, the number of hospital admissions has doubled in England. Tens of thousands of new infections in October could lead to hundreds of daily deaths in November. These numbers will grow if we do nothing," said Boris Johnson, whose confidence among Britons plummeted in 2020. Before the Parliament, the Prime Minister said that the government is doing everything possible to avoid a new "total quarantine".
Meanwhile, large companies continue their flight from the UK. It is now 98% clear that there will be no trade deal between the EU and Britain. Thus, if earlier many large companies were still thinking about leaving the Foggy Albion, now they are already implementing their plans. Next in line was one of the world's largest banks, JPMorgan. It is reported that the board of the bank is going to transfer more than 200 billion euros from London to Frankfurt, and about 200 employees of British branches will also move to other cities in continental Europe.
Meanwhile, "anti-conservative" sentiments continue to mature in Britain, replacing "anti-European" ones. We have already briefly touched on the achievements of Boris Johnson as Prime Minister of Great Britain. From our point of view, they simply do not exist. According to the latest information, the Prime Minister's approval rating among the country's residents has dropped to 30%. The disapproval rating rose to 63%. Thus, the result of Johnson's year-long work is "obvious." British people are disappointed with the government's actions and are increasingly inclined to believe that the new labor leader, Keir Starmer, would have done a much better job as head of state. The current government, according to the overwhelming majority of Britons, failed to cope with the pandemic, failed to conclude a trade deal with either the European Union or the United States, risks falling out with Brussels for many years, seriously undermine confidence in the Kingdom at the international level, all this negatively affects the economy, and therefore every single Briton. It is already having an impact because it is no secret that the standard of living and well-being has already begun to fall. Further, in almost any case, it is ordinary citizens who will pay for any crisis. Either by raising taxes or by reducing wages. Thus, all the collapses in GDP, past and future, are not the problems of the British government, but of the British, who elected this government at the end of last year, and even leaving all the threads of government in the hands of one person. Thus, we do not rule out the possibility that next year in the UK Parliament, a fight will begin with Boris Johnson himself. If Theresa May was twice passed a vote of no confidence and called for her resignation because she only failed to conclude an agreement with Brussels that would have satisfied the majority of parliamentarians, then Boris Johnson did even less. He also failed to reach an agreement with the Parliament, and there will be no trade deal with Brussels at all.
The average volatility of the GBP/USD pair is currently 126 points per day. For the pound/dollar pair, this value is "high". On Friday, September 25, thus, we expect movement inside the channel, limited by the levels of 1.2615 and 1.2867. The reversal of the Heiken Ashi indicator back down to signal the completion of the spiral upward correction.
Nearest support levels:
S1 – 1.2695
S2 – 1.2634
S3 – 1.2573
Nearest resistance levels:
R1 – 1.2756
R2 – 1.2817
R3 – 1.2878
Trading recommendations:
The GBP/USD pair on the 4-hour timeframe began to adjust to the moving average. Thus, today it is recommended to open new short positions with targets of 1.2695 and 1.2634 as soon as the Heiken Ashi indicator turns back down or the price bounces off the moving average line. It is recommended to trade the pair for an increase with targets of 1.2867 and 1.2939 if the price returns to the area above the moving average line.
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