The GBP/USD currency pair also traded very calmly on Monday. Although important macroeconomic reports were published in the UK this morning, they did not have a strong impact on market actions. However, they should be considered in more detail. So, according to the results of February, the GDP grew by only 0.1%. This is the average value for the indicator for the last year. The maximum was an increase of 0.8%, the minimum was a fall of 0.2%. Thus, we can say that nothing terrible happened, although the forecasts were higher. However, it should be remembered that it was in February that the military conflict between Ukraine and Russia began. Therefore, by the end of March, we can expect a drop in GDP, since the UK, among other things, has imposed many sanctions against the Russian Federation. And what do sanctions mean? If a company refuses to supply its products to Russia or Russian ships are prohibited from entering European ports, then the production volumes, revenues, and profits of British companies will decrease. Accordingly, sanctions never work only one way. The same applies to industrial production, which by the end of February decreased by 0.6% every month. This is not the first drop in production over the past year, there were even stronger ones.
Thus, although economic growth continues after the end of the economic crisis caused by the pandemic, production is not going through its best times. And by the end of March, the "minus" may be much stronger. In general, I would also like to note that the whole of Europe is now on the verge of another crisis. At least energy. Wherever Britain imports oil and gas, prices for hydrocarbons are still very high, which will spur inflation. And no one knows what value energy prices will eventually rise. Currently, negotiations are actively underway with Venezuela, Iran, and Saudi Arabia to increase the volume of oil production, which will be designed to replace Russian oil. However, to do this, sanctions should be lifted from Venezuela and Iran. And they were also introduced for a reason. Of the two evils, it turns out, you need to choose the lesser. If Iranian or Saudi oil starts entering European markets, then we can expect prices to fall and inflation to slow down.
Elections in France: it seems that there will be no split in the European Union after all.
Meanwhile, yesterday the results of the first round of presidential elections in France became known. Recall that there were three main candidates for the presidency. Emmanuel Macron, Marine Le Pen, and Eric Zemmour. As a result, Eric Zemmour did not even get 10% of the vote, and the French quite unexpectedly voted for the representative of the "extreme left party" Jean-Luc Melenchon. However, he, having gained 20.4% of the vote, which is not much less than Le Pen and Macron, did not get into the second round. Macron scored 28.1%, and Le Pen - 24.5%. Despite the minimal gap between the incumbent president and the leader of the "extreme right party" "National Union" Le Pen, many experts predict an easy victory for Macron in the second round. The fact is that the already losing candidates, all as one, called on the French to vote for Macron. Recall that Marine Le Pen has repeatedly been associated with Vladimir Putin, accusing her of friendly relations with Russia. And in the current circumstances, this is not the most advantageous position in the elections in a European country. In addition, Le Pen a few years ago advocated withdrawal from NATO and from the European Union, which is all the more unlikely to be welcomed by the French now, when full-scale military operations are taking place several hundred kilometers away from them. Thus, it is most likely that all the votes of Zemmour and Melenchon will go to Macron and this will be quite enough to win the election. Accordingly, the course of France will not change and there will be no new blow to the European Union.
As for the British pound, it continues to occupy no less a weak position in a pair with the dollar than the same euro currency. Despite the rather tough position of the Bank of England, traders do not believe in the pound, which perfectly visualizes COT reports.
The average volatility of the GBP/USD pair is currently 77 points per day. For the pound/dollar pair, this value is "average". On Tuesday, April 12, therefore, we expect movement inside the channel, limited by the levels of 1.2940 and 1.3100. A reversal of the Heiken Ashi indicator upwards will signal a round of corrective movement.
Nearest support levels:
S1 – 1.3000
S2 – 1.2970
S3 – 1.2939
Nearest resistance levels:
R1 – 1.3031
R2 – 1.3062
R3 – 1.3092
Trading recommendations:
The GBP/USD pair continues its downward movement in the 4-hour timeframe. Thus, at this time, sell orders with targets of 1.2970 and 1.2939 should be considered before the Heiken Ashi indicator turns upwards. It will be possible to consider long positions no earlier than fixing the price above the moving average line with targets of 1.3123 and 1.3153.
Explanations of the illustrations:
Linear regression channels - help to determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.
