The GBP/USD currency pair also collapsed on Wednesday in the early morning. Thus, the pair's 37-year lows have been updated once again. However, we have repeatedly said that the downward trend has not yet been completed, no matter how attractive the current purchase prices may be. In principle, the pound sterling has been falling in recent weeks without an appropriate "foundation" or macroeconomics. Thus, its fall on the news about the partial mobilization in Russia did not cause any surprise. But we'll talk about this below. By tradition, we will not consider the results of the Fed meeting in this article, as it is necessary for the market to work them out fully. The results will be announced tomorrow. Or the day after tomorrow, when the meeting of the Bank of England will be left behind.
In the meantime, it should be noted that the pound may thoroughly "fly" from side to side this week. The pound was falling on the eve of two meetings of central banks, and now, when there is disappointing news from Russia, the Lord himself has indicated to him to continue falling. Therefore, we have absolutely no doubt that, in the medium term, the British currency will continue to depreciate. Technically, nothing new can be added now since the pair updates its 37-year lows almost every day simply and easily. Naturally, all technical indicators are directed downwards, and traders can only manage to sell the pair.
The meeting of the Bank of England is the same "cat in the bag" as the meeting of the Fed. Despite the fact that the decisions of both central banks could be predicted with a probability of 80%, it is impossible to predict the market's reaction to them. Therefore, we do not doubt that today BA will raise the rate by 0.5-0.75%, but we do not undertake to predict how the pound will react to this change. The movement can be anything, from a "swing" to a powerful rise or fall.
The military conflict in Ukraine is likely to move into the second escalation stage.
We have not received "loud" news in the last few months from Ukraine. If we briefly consider the events of the previous six months, we get the following picture. Russian troops entered Ukraine along the entire available perimeter, but after a few months, they left three regions. Then fierce fighting began in Mykolaiv, Donetsk, Kharkiv, and Luhansk regions. All this time, the West has been pumping Ukraine with modern weapons according to NATO standards, and when enough of these weapons were accumulated, the AFU launched a counteroffensive. Over the past few weeks, the Ukrainian army has significantly improved its positions in the Kharkiv and Mykolaiv regions, and variable success has been observed in the Donetsk and Luhansk regions. Naturally, this turn of events did not suit the Kremlin, so just a few days ago, it was announced that referendums on joining the Russian Federation would be held in all occupied territories.
At the same time, Russian President Vladimir Putin announced a partial mobilization to replenish the ordinary army yesterday. We are talking about 300,000 conscripts, but many experts say that, in reality, the figure will be much higher. There were also reports that men of military age are now prohibited from leaving Russia. This means only one thing: a second wave of the offensive will occur. It is difficult to say when it will be because first, you need to mobilize 300,000 (which will take some time), then place them in military units, conduct training, and send them to Ukraine. And in the meantime, the APU can move forward even more. The situation with the referendums has already been condemned by the United States and the European Union, and Kyiv promises a "military response" if Russia tries to annex the occupied territories. All this only means that we are waiting for a new escalation of the conflict, new battles, new victims, new missile strikes, and so on. Naturally, the more Ukraine "burns", the worse it is for Europe and the UK, which are located much closer to the "hot spot" than the States. Therefore, the euro and the pound receive additional grounds for falling against the dollar and have even managed to start this process.
The average volatility of the GBP/USD pair over the last five trading days is 93 points. For the pound/dollar pair, this value is "average." On Thursday, September 22, thus, we expect movement inside the channel, limited by the levels of 1.1237 and 1.1422. The upward reversal of the Heiken Ashi indicator signals a round of upward correction.
Nearest support levels:
S1 – 1.1292
S2 – 1.1230
S3 – 1.1169
Nearest resistance levels:
R1 – 1.1353
R2 – 1.1414
R3 – 1.1475
The GBP/USD pair continues its downward movement in the 4-hour timeframe. Therefore, at the moment, you should stay in sell orders with targets of 1.1292 and 1.1230 until the Heiken Ashi indicator turns up. Buy orders should be opened when fixed above the moving average with targets of 1.1536 and 1.1597.
Explanations of the illustrations:
Linear regression channels help to determine the current trend. The trend is strong if both are directed in the same direction.
The moving average line (settings 20.0, smoothed) identifies the short-term trend and the direction in which you should trade now.
Murray levels are target levels for movements and corrections.
Based on current volatility indicators, volatility levels (red lines) are the likely price channel in which the pair will spend the next day.
The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.