Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
While the markets are in a state of panic related to the rise in US government bond yields, the pound shows no signs of concern about this. During the penultimate trading day of the week, the pound sterling traded very sluggishly, the same pattern was observed a day earlier. Thus, it turns out that the pound did not react at all to the notorious increase in the yield of American treasuries. The British currency fell at the end of last week after a 20-day upward movement without any corrections. Over the past five months, the pound has risen in price against the dollar almost without a rollback, which is visible on the 24-hour timeframe. Thus, the fall in the quotes of the pound/dollar pair by 370 points may be a banal correction. Or the beginning of a prolonged correction or even a new downward trend. It should be understood that the pound is now extremely overbought, and when it comes to the reasons for such a strong price rise, many can only spread their hands to the sides. There has certainly been no reason from the UK over the past 11 months that could trigger a rise in the pound. Even the factor of the settlement of the trade agreement between London and Brussels cannot in itself be considered a positive factor. Imagine the following situation: the economy has been falling for four years, and the standard of living of the population comes with it, and then you are told that the economy will not fall again. This "improvement" in reality is a trade deal with the European Union. Even before it was signed, many experts warned that even with the deal, due to the break with the EU, the UK would not be able to count a few percent of GDP. Yes, it would have been even worse without a deal, however, it is unlikely that the pound should have grown based on an agreement that still does not offset the risks of a reduction in GDP. Thus, we remain of the opinion that the growth of the pound by 60% is associated with the factor of infusion of trillions of dollars into the American economy and by 40% with the speculative factor. In any case, the pound is overbought and is too high, significantly exceeding its real value. And the most interesting thing is that the upward movement of the pair may continue in 2021, as the US Congress is preparing to approve a new package of stimulus measures for $ 1.9 trillion. And the profitability of American treasuries has nothing to do with it. The yield of US bonds is growing because the demand for them is low, and investors expect a strong increase in inflation in the coming years, so the yield of 1-1.5% is not so easy to attract them. And, by the way, the yield on British government bonds, since January 4, has increased from 0.17% to 0.75%. For some reason, no one focuses on this and does not try to link this data to changes in the exchange rate of the pound/dollar pair. Therefore, it seems that only the yield of American treasuries is growing.
Meanwhile, it was reported that the 45th President of the United States of America can and wants to become the 47th president. We are talking, of course, about Donald Trump, who in interviews with several respected media outlets made it clear that he is going to run for president in 2024. At the same time, Trump is not going to promote Mike Pence as his deputy. It is reported that Trump decided to abandon the candidacy of Pence since he did not support the idea of fraud in the election and recognized the victory of Joe Biden.
At the same time, the US Congress canceled its meeting on March 4, as there was a threat of a new attack on the Capitol building. Of course, it was again associated with the name of Donald Trump. Although Trump left the post of president a month and a half ago, the right-wing radical forces of the United States, according to the security service, could produce new provocations and riots related to expectations. The second inauguration of Donald Trump was on March 4, since before 1933, the presidential inauguration was held not on January 20, but on March 4. Absurd, but it was better to be safe, and the House of Representatives canceled its meeting. Also, the security services believe that provocations and riots are possible on March 6, so they are strengthening measures to protect the Capitol and suppress possible riots. Recall that tomorrow, March 5, the Senate should consider approving a new stimulus package, called "Joe Biden's economic rescue plan". There is no doubt that 50 Democratic senators will vote "yes" and 50 Republican senators will vote "no". Thus, tomorrow in the Senate there may be another series of confrontations between the two main political forces of the country with a known outcome since the decisive vote belongs to US Vice President Kamala Harris, a Democrat.
In the UK, meanwhile, the vaccination process continues at a high rate and almost 21 million people have already been vaccinated. Boris Johnson urges everyone to get vaccinated and not to refuse. So the UK does have an excellent chance of completing this process by September 2021. The main thing is not to interfere with new strains of "coronavirus".
The average volatility of the GBP/USD pair is currently 113 points per day. For the pound/dollar pair, this value is "high". On Friday, March 5, therefore, we expect movement within the channel, limited by the levels of 1.3789 and 1.4015. A reversal of the Heiken Ashi indicator back to the top will signal a new round of corrective movement.
Nearest support levels:
S1 – 1.3855
S2 – 1.3794
S3 – 1.3733
Nearest resistance levels:
R1 – 1.3916
R2 – 1.3977
R3 – 1.4038
The GBP/USD pair has started a new round of downward movement on the 4-hour timeframe. Thus, today it is recommended to stay in the sell orders with the targets of 1.3855 and 1.3794 until the Heiken Ashi indicator turns up. It is recommended to consider buy orders with targets of 1.4099 and 1.4160 if the price is fixed above the moving average line.