FX.co ★ Overview of the GBP/USD pair. May 6. Scotland intends to seek the right to a referendum through the Courts.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: 15.9574

The British pound on Wednesday traded higher for most of the day, managing to maintain a "swing" mode on all timeframes older than 5 minutes. We expected at the beginning of this week that the downward movement would continue, but in reality, the pound/dollar pair is again tending to grow. We have already said that it makes almost no sense to predict anything for the British currency now. There is no special logic in the movements of the pound right now. There is no clear trend in the pound right now. You can also try to find trends on lower timeframes and work with them. But even there, everything is not always smooth and simple. Thus, the pound/dollar pair remains one of the most unattractive instruments for trading at this time. In fundamental terms, there is not much to say now either. Many topics can theoretically be interesting to the pound. Some of them are very important. However, even many experts of international banks at the moment note that the markets react very strangely to the fundamental background. Many people believe that the pound is heavily overbought, and its rate has already taken into account all the positive news for 2020, 2021, and 2022. The pound has simply exhausted all the reserves of positive news and at the same time continues to ignore most of the negative ones. Thus, representatives of many banks believe that the pound will become cheaper, but are at a loss to answer the question, when will this happen? We still believe that the "speculative" factor and the factor of pumping trillions of dollars into the American economy are just the reasons that continue to hold the pound so high. There can be no other reasons now, as most of the factors are openly against the British currency. Consequently, despite the failed fundamental background from the Foggy Albion, the pound may even continue to grow in 2021.

And the background from the UK is less positive. Recall that today in Scotland, parliamentary elections will be held, which will be designed to answer the question of what the Scots themselves want at this time: to separate from England or to remain in the United Kingdom? Peaceful rallies and marches are taking place all over the country. There are a lot of supporters of an independent Scotland. According to social polls, the absolute majority of Scots at the rallies support independence from England and intend to support First Minister Nicola Sturgeon in her desire to demand permission from London to hold a referendum. However, the closer the victory of the Scottish National Party in the election is, the more likely it is that Edinburgh will achieve the right to a referendum, whether through the official permission of Boris Johnson or the court. Nicola Sturgeon said on Tuesday: "If the people of Scotland vote for the pro-independence parties, they will show that they want to separate from the UK, and no prime minister in London will be able to prevent this desire of the people." According to preliminary calculations, the three pro-independence parties can win a total of 79 to 82 seats out of 129, that is, 2/3. However, Nicola Sturgeon's party wants to achieve an absolute majority on its own, so as not to form coalitions with other parties and not depend on their opinions. And according to polls among political experts, the Scottish National Party can achieve such a result. However, this is not particularly important for further actions. The main thing is that the separatist parties must win the elections. Then Sturgeon can openly declare to London that the people have expressed a desire to hold a referendum. By the way, Edinburgh has already submitted a bill on the referendum to the Parliament. Now it needs to be passed (which requires a majority of votes), after which Scottish politicians are ready to defend their rights through the courts. It is noteworthy that Sturgeon believes that it is London, not Edinburgh, that will have to go to court: "If Boris Johnson wants to stop us, he will have to sue. If he doesn't, the referendum will by definition be legal. If it does, the decision will be up to the courts." Although preliminary opinion polls show a high probability of winning the election of the SNP, it should still be recognized that the entire Scottish society is split in this important issue approximately in half. The last two dozen polls have shown that the advantage is available to the supporters of independence, but it is too small. Moreover, during the pandemic, Scots believed that Nicola Sturgeon's government was coping with the virus much better than Boris Johnson. However, at this time, when the UK is one of the first places in the world in terms of vaccination rates, some Scots have stopped thinking so and are already ready to reconsider their opinion about leaving the Kingdom. In general, opinion polls now do not give a clear answer to the question, who has the advantage? For supporters or opponents of "Scexit"?

The main argument for Scotland remains the fact that a lot has changed since the 2014 referendum, and the country was torn out of the European Union against its will. In 2016, about 62% of Scots voted to remain in the EU. It turns out that the decision for the Scots was made by the British, who voted for leaving the EU. Most experts are already saying that a possible secession of Scotland would be far more detrimental to Scotland itself. Representatives of the London School of Economics believe that the three-hundred-year union with England cannot be broken off painlessly or with minimal losses. For Scotland, the losses will be very large, much more than from Brexit. And even the expected return of the country to the European Union will not cover the financial losses that the country will suffer from the break with the Kingdom. However, in Scotland itself, they are optimistic and cite the example of Ireland, which has long surpassed Britain in GDP per capita. Economists also note serious losses for Britain, Wales, and Northern Ireland.

The average volatility of the GBP/USD pair is currently 91 points per day. For the pound/dollar pair, this value is "average". On Thursday, May 6, we expect movement within the channel, limited by the levels of 1.3815 and 1.3998. A reversal of the Heiken Ashi indicator downwards may signal a new round of downward movement within the "swing".

Nearest support levels:

S1 – 1.3885

S2 – 1.3855

S3 – 1.3824

Nearest resistance levels:

R1 – 1.3916

R2 – 1.3947

R3 – 1.3977

Trading recommendations:

The GBP/USD pair has started a new round of upward movement on the 4-hour timeframe. Thus, today it is recommended to trade for an increase with the targets of 1.3947 and 1.3977 before the Heiken Ashi indicator turns down. Sell orders should be opened if the price is fixed below the moving average with targets of 1.3855 and 1.3824 and keep them open until the Heiken Ashi indicator turns up. Also, given the continuing "swing", it is not the worst decision to refrain from trading the pair for a while.