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Review of the GBP / USD pair. June 11th. Regular negotiations between London and Brussels ended without progress.


4-hour timeframe Technical data: Major linear regression channel: direction – up. The lowest linear regression channel: direction – up. Moving average (20; smoothed) – sideways. CCI: 31.8265 The British pound sterling against the US dollar has been in swing mode for almost a month. After yesterday it became known about the growth of American inflation to 5%, the British pound quotes soared up, but at the same time they still remained inside the side channel 1.4100 – 1.4220, in which they have been for several weeks. Yesterday, however, the quotes briefly dropped below the level of 1.4075, even reaching the level of 1.4075, but what difference does it make if after a couple of hours they returned to their usual range? Thus, as we expected, nothing changes due to the usual macroeconomic statistics. The pound sterling continues to trade very high and cannot even go down a little as part of a tangible correction. In principle, all the same factors are at work here as for the euro / dollar pair. America continues to pump up its own economy with trillions of dollars, do not give any opportunity for the US dollar to rise in price even a little. Market participants continue to remain in the longs, as they count on a strong recovery in the British economy and an increase in the key rate of the Bank of England, which has already been mentioned several times by representatives of the regulator. The global downtrend for the pound / dollar pair supposedly ended last year, so now the pound sterling can wait 6-8 years, if not more, growth. Therefore, at this time, it is simply impossible to single out any changes in the technical picture. The main question remains, when will the pair stop trading in the 120-pip range and start a new trend movement? However, market participants still ignore the fundamental background from the UK, so there is no even slight pressure on the British currency. While the European Union was summing up the results of the next meeting of the ECB, Great Britain and the European Union were trying to find a way out of the next “impasse” in which they found themselves after the end of Brexit. This time we are talking about the “Northern Ireland Protocol” and its non-compliance by London. At least that is what Brussels accuses him of. Boris Johnson and his government a few months ago unilaterally extended the grace period for customs and sanitary inspections for products that come from Great Britain to Northern Ireland, which, naturally, did not like the European partners. Representatives of the European Commission have already stated that London is obliged to adhere to all the points of the agreement that has already been reached. Otherwise, Brussels will not discuss new agreements with the Kingdom and go to court to resolve the dispute that has arisen. On Wednesday, the parties met to discuss the protocol on the Northern Ireland border, which remains in the Customs Union, as London believes it is not working as intended and needs to be revised. However, Brussels is categorically against the revision of the agreement and demands unquestioning implementation of all its points. According to Reuters, no progress was made during the negotiations. The parties said that no breakthrough was observed in the negotiations, however, they note that the negotiations cannot be called failed either. European Commission Vice-President Maros Sefcovic and David Frost, who had previously negotiated a trade deal with Michel Barnier, were trying to make progress. Sources close to the British government report that London is ready to unilaterally amend some of the points of the agreement “in order to prevent a food blockade of Northern Ireland.” According to Boris Johnson, the country has already faced a shortage of certain groups of goods and medicines due to bureaucracy and the refusal of British suppliers to send their products to the Irish part of Great Britain, since the new regime on the border greatly complicates the work and minimizes their profits. Some members of the British government even believe that the European Union is purposefully creating problems under the Northern Ireland Protocol, as if taking revenge on London for Brexit, and call on the current government not to indulge in these provocations. In general, the situation is again practically stalemate and smells of possible litigation. It should also be noted that customs inspections of certain groups of goods at the Northern Ireland border is not the only issue on which the parties have disagreements. In total, about 30 controversial issues were discussed during the negotiations. In Northern Ireland itself, they are categorically unhappy with the new protocol, as they believe that it causes problems with the supply of all the goods the country needs. Also, as experts note, London is very strongly opposed to any proposals from Brussels because of its unwillingness to again be dependent on European legislation. London wants to have complete independence from the European Union and build further relations solely on those conditions that are beneficial to itself. “If the UK continues to take unilateral action, the EU will not hesitate to respond quickly, firmly and decisively to ensure that the Kingdom respects its international obligations,” Maros Sefcovic said. David Frost reminded his European counterpart that London reserves the right to apply Article 16 of the protocol, which allows him to resort to unilateral action in the event of a threat of serious economic and social consequences. Thus, the tension in relations between Brussels and London remains, but it does not affect the pound sterling in any way. The British currency is now waiting for its own statistics, which will be published this morning. Let’s remind that today the volume of GDP for April, the volume of industrial production for April, as well as the balance of trade will become known. In addition, the Governor of the Bank of England Andrew Bailey, as well as two of his deputies, Sir David Ramsden and John Cunliffe, will speak today. Their speeches can touch on monetary policy, and the economic situation of Great Britain, and its geopolitical problems with the European Union. The average volatility of the GBP / USD pair is currently 89 pips per day. For the pound / dollar pair, this value is “average”. On Friday, June 11, we therefore expect movement within the channel, limited by the levels 1.4076 and 1.4253. The reversal of the Heiken Ashi indicator back downward will signal a new round of the downward movement within the “swing”. Nearest support levels: S1 – 1.4130 S2 – 1.4099 S3 – 1.4069 Nearest resistance levels: R1 – 1.4160 R2 – 1.4191 R3 – 1.4221 Trading recommendations: GBP / USD pair on a 4-hour timeframe started a new round of the upward movement. Thus, today it is recommended to stay in buy orders with targets at 1.4191 and 1.4221 until the Heiken Ashi indicator turns down. Sell ​​orders should be opened in the event of a reversal of the Heiken Ashi indicator downward with a target of 1.4099. The pound sterling now continues to move in absolute flat, which should be taken into account when opening any positions. Recommended reading: Review of the EUR / USD pair. June 11th. Inflation in the US is growing, the ECB leaves the parameters of monetary policy unchanged. Trading signals, COT report: Forecast and trading signals for the EUR / USD pair for June 11. Forecast and trading signals for the GBP / USD pair for June 11. – Source: InstaForex

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