X hour for the pound

morning-news

Gold  1800,54
(-0,17%)

EURUSD   1,1797
(+0,01%)

DJIA  34719,50
(+4,45%)

OIL.WTI  69,955
(+14,47%)

DAX   15438,50
(+1,70%)

We haven’t written about the British currency for a while. But of course we continue to follow it. Now is the time to focus our subscribers’ attention on what’s going on. The British currency is in a battle to stay above the SMA 200.


GBPUSD

GBPUSD

We have intentionally compressed the chart further to make it clearer to you what is going on in the Pound/Dollar pair. First a bit of history, from our previous newsletters.
You can see on the chart an ascending channel, which has been growing almost at a 45% angle for half a year. You can see the upper break of the channel. As we have noted, more often than not, such a breakout is false. Which is what happened this time.
Then it was a break-down of the channel. And the lower limit of the channel became a resistance line instead of the support line. As we wrote, we struggled for the price to get back to the channel. The re-test of this line took place as many as 5 times. And each time the bears repulsed the attack.
As a result, the pound/dollar pair started to decline. And fell to a simple 200 day moving average. The price broke through it and closed 2 times lower. According to all the rules of classical TA, this is an extremely bearish run-up. In this case, however, the bulls did not agree. In Wednesday’s trading the bulls tried to push the price back above the SMA 200. In doing so, the moving average itself again becomes resistance instead of support.
This chart can be easily published in any book about technical analysis. And you can show it to the skeptics, who claim that technical analysis does not work. The main thing to remember is that technical analysis gives us a better understanding of where price is at the moment. And where other traders are placing stops. But it doesn’t give us the answer to what’s going to happen next.
Enough about charts. Why is the British pound falling? This is the question our subscribers are asking. We think it is quite simple. Despite the lifting of restrictions in the UK, the coronavirus situation is worsening again around the world. Hopes of life becoming what it used to be are postponed indefinitely. Which means a repeat of a year ago, when the British pound was falling against all currencies.
And one more factor that few people think about. The Foggy Albion lost the lead in the number of vaccinated citizens that allowed the pound to rise. The US, many EU countries, Israel etc, have vaccinated just as many of their residents. Which means they can similarly open their borders and remove covid restrictions. There is no longer any leadership in this indicator for Britain.

13.45 ECB interest rate decision
14.30 ECB press conference and monetary policy commentary


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