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Review of the GBP / USD pair. January 22. The pound sterling has renewed its 2.5-year highs and is not going to stop there.



DATE OF PUBLICATION: 2021-01-22 03: 07: 474-hour timeframe Technical data: Major linear regression channel: direction – up; Younger linear regression channel: direction – up; Moving average (20; smoothed) – up. CCI: 111.3357 British the pound sterling on Thursday, January 21, finally broke through the level of 1.3700, around which it has been hovering since January 4. As we expected, each subsequent rebound from the 1.3700 level only increased the chances of overcoming this level. Each next bounce was less than the previous one. Therefore, it is not at all surprising that in the end the pound sterling continued to rise in price above this level. There is nothing new to say about the reasons for the new growth of the British currency. In the article on the euro / dollar, we named hypothetical reasons why the euro may rise in price in recent months, when there is no apparent reason for this. In the situation with the pound sterling, there are not only no reasons for growth, there are many reasons for the fall of the British currency. However, it is the pound that shows even stronger growth than the euro. One has only to list the main factors that are currently taking place. Coronavirus: UK deaths at record levels. Economy: GDP will contract not only in the fourth quarter of 2020, but also in the first quarter of 2021. Monetary policy: no change, but Bank of England members are still contemplating negative rates. Brexit: no comments. Finding even hypothetical reasons for the growth of the British currency is very difficult. But it is the pound that continues to rise in price together with the US dollar. Although in the States now, nothing openly negative is happening. Moreover, there have been positive developments with the arrival of Joe Biden. Many of Donald Trump’s absurd decisions will be reversed, the Democratic president takes the “coronavirus” much more seriously than his predecessor, the $ 1.9 trillion stimulus package, no doubt, will be agreed (since the entire US government is now controlled by Democrats), GDP forecasted with growth in the fourth quarter. Thus, we can only make the same assumptions as for the euro currency. “Speculative” factor, actions of large players, technical upward trend. In this situation, traders try to pay attention to everything that happens in the world, and is related to the pound or dollar. For example, in early 2020, the Governor of the Bank of England Andrew Bailey made several speeches, each of which could result in a drop in demand for the British currency. For example, Bailey drew attention to the fact that “at best, the economy will not change in the fourth quarter.” For example, Bailey said that “the coronavirus continues to have a negative impact on the economy and its recovery.” However, Bailey did not say that the Bank of England abandoned the idea of ​​introducing negative rates. Markets, even on this at best neutral information, continued to buy the pound and “knock on the doors” of the 37th floor. Bailey drew the audience’s attention to the fact that the economy will recover, but according to the BA chairman, she will start doing this later. British Finance Minister Rishi Sunak made a similar rhetoric. He said the British economy may still sag before it starts to grow. Thus, we get a forecast in the style: the British economy will definitely start to grow, but later, and if there is no fourth “lockdown” or a new wave of “coronavirus” diseases. While the economy is really growing in the United States, in Britain it is growing only in words. However, everything that happens can be described as unequivocally in favor of America. Recall that Donald Trump has repeatedly said over the four years of his rule that the country needs a “cheap” dollar and accused the Eurobank and the Bank of China of currency manipulations. Now the dollar is finally falling and theoretically can do it for as long as you want. In our article on the euro / dollar, we have already noted such a factor as a change in the global trend. If you look at the monthly timeframe for the pound, you get approximately the same picture: the British currency has been depreciating against the dollar since 2007. Sooner or later, any trend ends. So we are now witnessing the emergence of a new upward trend that will be relevant over the next 5-10 years? Therefore, all fundamental factors do not play any role now? The pound sterling has been falling for 13 years, but any process comes to an end? In light of this assumption, it can also be concluded that any future disappointments in the UK will also not matter much for the pound. For example, a “Scottish” question. There are already reports that dissatisfaction with London’s policies continues to grow in Scottish society. In the parliamentary elections on May 6, the Scottish National Party could win a record number of votes, giving it additional strength to negotiate with the Boris Johnson government. It is unlikely that Nicola Sturgeon is counting only on the consent of Boris Johnson, which he will be able to get by the “wash and roll” method. Most likely, there are hidden trump cards in the sleeve of the First Minister of Scotland, which she will play only as a last resort. Potentially Great Britain can lose Scotland and, naturally, these are new problems for its economy. But if the pound is almost guaranteed to grow in the coming years, it turns out that this also does not matter? The average volatility of the GBP / USD pair is currently 93 points a day. For the pound / dollar pair, this value is “average”. On Friday, January 22nd, therefore, we expect movement within the channel, limited by the levels of 1.3610 and 1.3796. A downward reversal of the Heiken Ashi indicator will signal a new round of downward correction. Nearest support levels: S1 – 1.3672S2 – 1.3611S3 – 1.3550 Nearest resistance levels: R1 – 1.3733R2 – 1.3754 Trading recommendations: GBP / USD pair at 4- on the hourly timeframe, a new round of the upward movement has begun. Thus, today it is recommended to trade upside with the target of 1.3794 before the Heiken Ashi indicator turns down. It is recommended to consider sell orders with the targets of 1.3611 and 1.3550 if the price consolidates below the moving average line. Recommended reading: EUR / USD pair overview. January 22. The euro is showing a willingness to return to 2.5-year highs. The ECB meeting turned out to be absolutely passable. Trading signals, COT report: Forecast and trading signals for the EUR / USD pair for January 22. Forecast and trading signals for the GBP / USD pair for January 22. Material provided by InstaForex – www.instaforex.com Source – InstaForex

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