4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - downward.

CCI: -148.6706

The British currency has been moving in the last week and a half identical to the euro currency. This suggests that the factors that affect both currency pairs are the same. Therefore, they come from across the ocean. However, we would also like to remind you that the euro/dollar pair has been correcting since the beginning of 2021, that is, for 2 months. However, the pound/dollar pair started doing this only a week and a half ago. Thus, on the one hand, the pound remains extremely overbought, and on the other hand, at any time, the "speculative" growth can resume, which drove the pound (partly) to such heights. Plus, this can also include the "US economic rescue plan" approved by the Senate, which now implies an infusion of $ 2 trillion into the economy, which can also play in favor of the British pound. From a technical point of view, the pound should continue to fall and at the same time a strong one. We have already noted the fact that over the past 11-12 months, the pound, for no particular fundamental reason (from the UK for sure), has grown by about the same amount as it fell during the four previous "Brexit" years. This is illogical. However, as we have already said, the factor of "speculative" growth and the factor of a new potential increase in the money supply in the United States may again play in favor of the pound. These points should also be kept in mind, without relying too much on the strong growth of the dollar. However, so far, downward trends have formed on all timeframes, starting from the 4-hour one, so it is naturally recommended to trade downwards. As we have repeatedly noted, any fundamental theory must be confirmed by specific technical signals. If they are not, then the theory, therefore, does not work yet.

Meanwhile, a new conflict is breaking out between Britain and the EU. Last week, the government of Boris Johnson unilaterally extended for six months the simplified regime of checks on the border between Northern Ireland and the United Kingdom. These actions were not coordinated with the EU leadership. The Northern Ireland Secretary has already criticized 10 Downing Street, saying the European Union is negotiating with a partner that cannot be trusted. "The EU is now considering possible legal steps, which will mean a much tougher negotiation process in the future instead of a friendly partnership," said Simon Coveney. The Vice-President of the European Commission, Maros Sefcovic, has already said that London violated the Northern Ireland Protocol, which is part of the agreement on the UK's withdrawal from the EU. However, London does not agree with the accusations of Brussels. David Frost, who negotiated the trade deal with Michel Barnier and now holds the post of Minister for Relations with the European Union, believes that "such precedents take place in international practice and are fully consistent with the intentions to fulfill the obligations under the protocol". Recall that from January 1, tough customs checks were to begin in the ports of Northern Ireland for goods arriving from the rest of the UK. However, since British firms were not ready for this, the EU and Britain agreed to introduce a simplified inspection regime for the first three months. This simplification consisted in the fact that some categories of goods passed through customs without many formalities. British firms were unable to adapt to the new customs regime by the beginning of March, so the British government made an offer to Brussels to extend the validity of the "simplified regime". The European Union refused, and now London has taken the appropriate decision unilaterally. It is still unclear how the European Union will respond to these illegal actions on the part of Boris Johnson, but most experts agree that Brussels has enough leverage to put pressure on the UK. It is only necessary to remember that there are no clauses in the trade agreement that would regulate the financial services sector. And for London, which has long been considered the financial capital of the world, this area means a lot. Earlier, we said that London is very unhappy with the fact that the European Union restricts the access of British financial companies to its market. According to 10 Downing Street, the European Union does not treat all its partners equally. The parties are currently negotiating on this issue, but the EU has the right to grant or not grant British companies access to its market. Thus, with the help of this lever, most likely, the pressure will be exerted on London. It should also be noted that the mood among the population of Ireland is already beginning to deteriorate. Many fear that new riots may begin in the near future. After all, the plan that defines the new mechanisms that will operate on the border between Ireland and Northern Ireland is good on paper, but in real life, problems have already begun to arise.

The average volatility of the GBP/USD pair is currently 113 points per day. For the pound/dollar pair, this value is "high". On Monday, March 8, thus, we expect movement within the channel, limited by the levels of 1.3717 and 1.3943. A reversal of the Heiken Ashi indicator back to the top 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 the sell orders with the targets of 1.3794 and 1.3733 until the Heiken Ashi indicator turns up. It is recommended to consider buy orders with targets of 1.4038 and 1.4099 if the price is fixed above the moving average line.