4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - downward.

CCI: -137.3953

The British pound, paired with the US dollar, declined on the week's first trading day. It continued to depreciate on the second. Although the concept of "devaluing" is now difficult to apply to the British pound, it has grown by 28 cents or by 2,800 points over the past year and a half and has now adjusted by 460. Just a few weeks ago, the pound/dollar pair updated its three-year highs. So what is happening now with the pair? You can not call it anything other than a "correction." Accordingly, both major currency pairs are being adjusted by all signs now.

Moreover, the global technical and fundamental factors that influence them are also almost identical. After all, although the price has recently updated its highs for several years, it has updated them by only a few points. It can hardly be said that up to this point, the pair was in an upward trend. It is correct to say that the correction was too deep. And if so, then we are now seeing the same correction structure for the pound/dollar as the euro/dollar. Thus, the British currency may also fall in the coming weeks to its previous local minimum, located near the level of 1.3666. Global fundamental factors now also remain the same, so it is not necessary to talk about a serious growth of the US currency from this point of view. The only difference between the UK and the US that has emerged in recent weeks is the increase in new coronavirus diseases in Foggy Albion. Recall that in the last couple of weeks, the number of daily recorded cases of infection has increased to 20,000 per day, which is comparable to the number of infections during the first and second "waves." Thus, despite the high vaccination rates in Britain, there are some concerns about the third "wave" of the pandemic. So far, of course, there is no point in sounding the alarm since, in a month, about 80% of the population in the country can receive both vaccinations against the "coronavirus." Therefore, full vaccination of the country's entire population is a matter of 2-3 months at most. At the same time, the WHO warns that the "coronavirus" will not disappear with full vaccination, even of the entire population of the planet. Thus, people can still get sick with it. New "strains" may appear. There may be problems with vaccination in countries with a low level of development. Therefore, it is too early to talk about a complete cure of humanity from COVID, to put it mildly. For Britain, this means that the pace of recovery of its economy may slow down again. And this will delay the full recovery of the economy. So far, Boris Johnson has postponed the complete lifting of quarantine restrictions to July 19. However, if the number of cases of infection continues to grow by that time, the quarantine may be extended for another month or two. Thus, for the UK now, this is the main problem and a cause for concern. Probably, under the influence of this factor, the pound is now becoming cheaper at a faster pace than the European currency, which does not have such problems.

Based on all of the above, we also do not expect any hints from the Bank of England about the possible curtailment of the quantitative stimulus program in the near future, and even more so about raising the key rate. Conversations can go on as much as you like, but there are no real grounds for weakening monetary stimulus at this time. Based on this, we conclude that the US dollar can continue to strengthen solely on the technical need for a correction in global terms. After the level of 1.3666 is worked out, it will be possible to count on the completion of the downward movement and consider options with the resumption of the upward trend.

Also, Brexit remains a big problem for the UK, which ended just a few months ago, and now it is still very difficult to say what the real consequences for the economy will be as a result of it? In the first months of the break with the European Union, the volume of imports and exports between the Kingdom and the bloc fell. However, the British government can also easily explain any decline or reduction by the "coronavirus" epidemic and the global crisis. It should be understood here that it is very unprofitable for British leaders to see a certain decline in the economy, which occurred precisely because of Brexit. Brexit was presented to the British with such aplomb that it will be the beginning of a new era for the UK, and all the negative consequences will be quickly offset by new trade deals that the country can now conclude with anyone in the world. Therefore, the more negative consequences of Brexit are discussed in the press, the greater the likelihood of discontent among the British masses. Recall that only 52% of Britons voted "for" Brexit in 2016. At least 48% may be dissatisfied with the changes that have occurred within the country. In principle, we can already see that within the United Kingdom, dissatisfaction is expressed not by individuals or groups of people but by entire countries. Scotland will hold its independence referendum, as it believes that its opinion was poorly taken into account when leaving the EU. Northern Ireland is now forced to settle for a border with Ireland (albeit not "hard"), and many inconveniences and restrictions are caused by the fact that Ireland remained in the European Union. Most of the residents of Northern Ireland do not raise the issue of secession from the Kingdom with an edge. However, they admit that their country may also secede from the UK within the next 25 years. Thus, in the future, the Kingdom may lose two out of four countries at once. These are too distant prospects. So far, the pound is reacting more to pressing problems.

The average volatility of the GBP/USD pair is currently 75 points per day. For the pound/dollar pair, this value is "average." On Wednesday, June 30, we expect movement inside the channel, limited by the levels of 1.3768 and 1.3918. 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 1.3768 until the Heiken Ashi indicator turns up. Buy orders should be opened if the price is fixed above the moving average, with a target of 1.3977.