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Review of the GBP / USD pair. March 8. A new conflict broke out between the European Union and Great Britain over Northern Ireland.



4-hour timeframe Technical data: Major linear regression channel: direction – up. Junior linear regression channel: direction – up. Moving average (20; smoothed) – down. CCI: -148.6706 The British currency has been moving in the last one and a half weeks in the same way as the euro. This suggests that the factors that affect both currency pairs are the same. Therefore, they come from overseas. 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 already, but the pound / dollar pair started doing this only a week and a half ago. Thus, on the one hand, the pound sterling remains extremely overbought, and on the other hand, “speculative” growth may resume at any moment, which drove (partly) the pound to such heights. Plus, this can also include the “US economy rescue plan” approved by the Senate, which now implies the injection of $ 2 trillion into the economy, which can also play in favor of the British pound. From a technical point of view, the pound sterling should continue to fall, and moreover, strong. 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 completely 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 play again in favor of the pound sterling. These points should also be kept in mind, not relying too much on the strong growth of the dollar. However, while downward trends have formed on all timeframes, starting from the 4-hour one, therefore, it is naturally recommended to trade for a fall. As we have noted more than once, 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 flares up between Britain and the EU. Last week, the government of Boris Johnson unilaterally extended the simplified inspection regime on the border between Northern Ireland and the UK by six months. These actions were not coordinated with the EU leadership. Northern Ireland’s foreign minister has already criticized 10 Downing Street, saying the European Union is negotiating with a partner that cannot be trusted. “Now the European Union is considering possible legal steps, which will mean in the future a much tougher negotiation process instead of a friendly partnership,” said Simon Cowney. 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 Britain’s withdrawal from the EU. However, London does not agree with Brussels’ accusations. David Frost, who negotiated with Michel Barnier on the trade deal, 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 cargo went through customs without many formalities. British firms were unable to adjust to the new customs regime by early March, so the British government made a proposal to Brussels to extend the “simplified regime”. The European Union refused, and now London has taken the appropriate decision unilaterally. It is not yet clear how the European Union will respond to these illegal actions on the part of Boris Johnson, but most experts agree that Brussels has leverage on the UK and there are enough of them. One has only to remember that there are no clauses in the trade agreement that would regulate the financial services industry. And for London, which has long been considered the financial capital of the world, this area means a lot. We have already 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 European Union retains the right to provide or not provide British companies with access to its market. Thus, with the help of this lever, most likely, pressure will be exerted on London. It should also be noted that the mood among the Irish population is already beginning to deteriorate. Many fear that new riots may begin in the near future. After all, the plan, which defines the new mechanisms that will operate on the border between Ireland and Northern Ireland, are good on paper, but in real life problems have already begun to arise. The average volatility of the GBP / USD pair is currently 113 pips a day. For the pound / dollar pair, this value is “high”. Thus, on Monday, March 8, we expect movement within the channel, limited by the levels of 1.3717 and 1.3943. The reversal of the Heiken Ashi indicator back upward will signal a new round of corrective movement. The nearest support levels: S1 – 1.3794S2 – 1.3733S3 – 1.3672 The nearest resistance levels: R1 – 1.3855R2 – 1.3916R3 – 1.3977 Trading recommendations: GBP pair / USD on the 4-hour timeframe the downward movement continues. Thus, today it is recommended to stay in sell orders with targets at 1.3794 and 1.3733 until the Heiken Ashi indicator turns upward. It is recommended to consider buy orders with the targets of 1.4038 and 1.4099 if the price consolidates above the moving average line. Recommended reading: Review of the EUR / USD pair. March 8. US Senate Approves Joe Biden’s $ 1.9 Trillion Stimulus Package Trading Signals, COT Report: EUR / USD Forecast and Trading Signals for March 8 GBP / USD Forecast and Trading Signals for March 8 Material provided by the company InstaForex – www.instaforex.comSource – InstaForex

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