4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -135.0682
The British pound, paired with the US dollar, also continues to trade quite calmly. The volatility is slightly higher than for the euro/dollar pair. The pound has always been more volatile than the euro. The technical patterns of the 4-hour timeframes of the euro and the pound are almost identical. A strong fall began after the Fed meeting, and it continues at a much less strong pace. The euro and the pound continue to fall in price. The markets cannot find new factors and reasons for new sales of the two main pairs. Thus, in the case of the pound/dollar pair, we also believe that there is an influence of a technical factor from the 24-hour timeframe since a new wave of corrective movement is also needed. If this is the case, then the pound may also fall to its previous local lows in the future, located in the range of 1.3600-1.3666. The dollar has the potential to grow by another 150-200 points. It is very difficult to say how it will go up further since there are also no changes in fundamental global factors or "macroeconomics" in the pound/dollar pair. Macroeconomics is not very interesting for traders at this time. For example, yesterday, it became known that the British economy shrank not by 1.5% in the first quarter but by 1.6%. However, the British currency did not feel much pressure on this issue. It would be better to say that the nature of the movement has not changed. It remained moderately downward. Also, as in the euro case, most of the last downward movement of the pair took place exclusively at the Fed meeting. If you remove it from the equation, it turns out that the US dollar has risen by 140 points. These calculations also allow us to conclude that few people want to buy the dollar now. Everyone is afraid of high inflation in the United States. The American currency is getting cheaper because of the enormous amounts that the Fed and the Treasury are pouring into the American economy. Consequently, the growth of the dollar is limited and paired with the pound.
Unfortunately, the "coronavirus" factor has again come out on top in terms of importance for the British pound in recent weeks. No matter how much the British authorities want to reassure the public and the markets, it is unlikely that 20,000 cases of diseases every day can be considered a normal phenomenon in a country where more than half of the adult population has already received both coronavirus vaccinations. What would have happened if the vaccination hadn't started yet? Plus, it should be remembered that it is summer. The warm season of the year. The time when the virus traditionally spreads more slowly. And 20,000 diseases a day is an indicator of the beginning of the second wave of the epidemic, which began in the UK in October last year, with the arrival of cold and rain. Thus, now it is quite possible to talk about the third "wave" of the epidemic.
The figures already allow us to do this. Of course, I want to believe that there will be no need to tighten quarantine restrictions in the country this time. Given all the stories of recent weeks with Boris Johnson's former adviser Dominic Cummings and the retired health minister Matt Hancock, a new wave of the epidemic could very much "undercut" the UK. Recall that Johnson's former adviser Cummings criticized the entire UK government during the first "wave" of the pandemic, calling its actions incompetent and unprofessional. Cummings also indicated that he heard the phrase uttered by Boris Johnson that he "would rather see mountains of corpses than enter a lockdown." Former Health minister Matt Hancock also added fuel to the fire, who managed to kiss his assistant on camera although both he and she are married and have children. The minister had to apologize and resign hurriedly.
A new wave of the pandemic will automatically mean that the British economy will start to slow down again. And if anyone does not remember, it is already not growing too fast and strongly to talk about a full recovery after the crisis in the near future. Thus, the UK is really on the verge of a new "wave" of a pandemic and a new crisis, and this factor can have a strong impact on the pound. On June 28, about 23 thousand cases of the disease were recorded in the country, and on July 19, all quarantine restrictions should be completely lifted in the country. From our perspective, the timing of the lifting of quarantine measures has a high chance of moving into the future indefinitely.
Moreover, now a new strain of "coronavirus" called "delta" (or "lambda," as it is also called) is raging in the country. This strain is not the only one discovered in recent months, but the total number of cases in the UK is forcing other countries to close air links with the Kingdom. In addition, EURO 2020 matches are currently being held in the UK, and most medical experts believe that they are the reason for the increase in cases of infection. If so, the number of infections will only grow since most of the tournament's final matches are held in Britain. Representatives of the healthcare sector also warn that the situation in the country with a pandemic may get out of control again. So far, the British authorities believe that they will be able to cope with a new round of infections by increasing the speed of vaccine production and vaccination of the population. Only time will tell whether they will succeed with this plan. We want to say that the pound currently has a greater chance of continuing to fall than the euro.
The average volatility of the GBP/USD pair is currently 73 points per day. For the pound/dollar pair, this value is "average." On Thursday, July 1, we expect movement inside the channel, limited by the levels of 1.3736 and 1.3882. The upward reversal of the Heiken Ashi indicator will signal a new round of corrective movement.
Nearest support levels:
S1 – 1.3794
S2 – 1.3733
S3 – 1.3672
Nearest resistance levels:
R1 – 1.3855
R2 – 1.3916
R3 – 1.3977
Trading recommendations:
The GBP/USD pair continues its downward movement on the 4-hour timeframe. Thus, today it is recommended to stay in sell orders with targets of 1.3794 and 1.3736 until the Heiken Ashi indicator turns up. Buy orders should be opened if the price is fixed above the moving average, with targets of 1.3916 and 1.3977.
