Overview of the GBP/USD pair. April 2. The pound is calm. The British want to extend the "transition period"

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - upward.

CCI: 91.3539

The GBP/USD currency pair starts the fourth trading day of the week with a rather weak (for current realities) movement along with the Murray level of "3/8"-1.2451. Over the past few days, the pound/dollar pair has worked out this level several times, but never managed to gain a foothold above it or, on the contrary, push off from it and start a downward correction. Thus, we believe that traders have come to a certain "point of equilibrium" - the balance of supply and demand. In order for the pair to continue the upward trend or complete it, you need serious fundamental reasons or the entry of major players into the currency market with large transactions. During the past day, macroeconomic statistics from overseas could support the US dollar (as was the case with the euro currency), however, quite unexpectedly, the correlation through the US dollar was broken in the last two days. Before that, the EUR/USD and GBP/USD pairs moved almost identically with adjustments for volatility.

In principle, there is no news from the UK at the moment. Except for new reports of those infected with the "coronavirus" and those who died from it. Also, like the States, the UK is beginning to prepare for the peak of the epidemic, which, according to British scientists, could also take place in two weeks. The main focus of infection in the Foggy Albion remains in London. In London, field hospitals are being developed, and shopping and exhibition centers are also taking on the role of temporary hospitals. According to the latest information, the number of infected people in the UK is already about 30,000, while the authorities and representatives of the health sector claim that there are actually more infected Britons. The health care system can conduct about 10-15 thousand tests for "coronavirus" per day. It is clear that these capacities are not enough to establish the real scale of the epidemic as soon as possible.

Meanwhile, the topic of Brexit, which has been bothering the residents of the UK for the past three years and was the source of all the problems for the British pound, has clearly taken a back seat. According to residents of Britain, Brexit should have had a negative impact on the British economy, as well as on the welfare of the country's residents themselves. Now, when the effect of Brexit will be multiplied by the consequences of the "coronavirus", according to many, it will become very bad. Unfortunately, minus on minus gives a plus in mathematics. In real life, two multiplied negative events will have a stronger negative effect than one by one. According to the latest social polls, almost 64% of Britons support extending the "transition period" to allow the British government to focus on fighting the epidemic. 36% of respondents are in favor of leaving the alliance according to the plan, that is, on December 31, 2020. At the same time, among the supporters of the first option were both supporters of the Labor Party and the Conservative one. Meanwhile, the UK, which, according to Boris Johnson, wants to achieve full independence from the European Union, is already beginning to feel the possible consequences of parting with the bloc. This is the EU's early warning and response system. For example, Health Minister Matt Hancock insists that London should retain membership in the organization. The EWRS system allows you to exchange information and assess the risk of diseases, which in the current environment is a very important factor in the fight against the epidemic. British doctors believe that if London withdraws from this program, it will put the health of many British citizens at risk. Opposition political forces believe that Boris Johnson is obliged to ask for an extension of the "transition period".

Thus, the case remains for the self-isolated Boris Johnson. It is not known how official London is going to hold talks with Brussels against the background of the raging epidemic. Common sense really says that the negotiations should be postponed, and now solve much more important problems for humanity. However, will it change the principled position of the Prime Minister of Great Britain?

From a technical point of view, the GBP/USD pair is currently flat. Despite the fact that volatility has decreased in the last few days, it still remains high. Thus, the current movement is not too similar to the "classic" flat. For further upward movement, traders should now wait for the overcoming of the Murray level of "3/8"-1.2451. To date, there are no major publications planned in the UK. But traders, in any case, continue to ignore statistics, so we recommend paying closer attention to technical factors.

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The average volatility of the GBP/USD pair in the last four days has significantly decreased to yesterday's 109 points, which is good news. At the moment, the average value for the last five days is 249 points. However, the activity of traders on the pound/dollar pair still remains quite high, which should be taken into account. On Thursday, April 2, we expect movement within the channel, limited by the levels of 1.2157 and 1.2655. Although now there is a frank flat with much narrower borders.

Nearest support levels:

S1 - 1.2207

S2 - 1.1963

S3 - 1.1719

Nearest resistance levels:

R1 - 1.2451

R2 - 1.2695

R3 - 1.2939

Trading recommendations:

The GBP/USD pair on the 4-hour timeframe retains the prospects of an upward movement. Thus, long positions on the pound with a target volatility level of 1.2655 remain relevant now. It is recommended to open new buy positions if the bulls overcome the level of 1.2451, which now stops further movement to the north. It is recommended to sell the British currency with the goal of 1.1963, if the bears manage to overcome the moving average.

The material has been provided by InstaForex Company - www.instaforex.com