Overview of the GBP/USD pair. July 30. The US GDP report can finish off the US dollar. A new international conflict is brewing

4-hour timeframe

analytics5f220ef6897e2.jpg

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 134.8997

Recently, we often write about the fact that a "cold war" is brewing between China and the United States. However, we should not forget that the UK also has serious claims to Beijing. And not just in the UK. Recently, the whole world has faced the "Chinese problem" and the "Chinese virus". In addition, China has adopted a law on "national security for Hong Kong", which, in fact, canceled the autonomy of this city and immediately caused a flurry of indignation in almost half of the countries of the world that conducted active business with Hong Kong, but are not going to continue to do so if Beijing establishes power over this city. Beijing has established power, and Hong Kong has already begun to experience all the delights of life as part of China. The United States has cut off most of its trade preferences, many countries and companies have refused to export technology to this district, and the situation in Hong Kong will only get worse in the future. However, it is the UK that has the most claims, first, for the "coronavirus" (the British government has already stated that it does not know how to conduct further business with China), and second, for Hong Kong, because it is according to the British-Chinese Treaty of 1984, since 1997, Hong Kong must be Autonomous for at least 50 years, that is, until 2047. However, the Chinese government, in its own way, asked London not to interfere in China's internal affairs, and that was the end of all diplomacy. However, Boris Johnson immediately said that he would provide opportunities for all residents of Hong Kong with British passports to live and work in the UK without visas, and in the future even have the opportunity to obtain British citizenship. However, China is unlikely to just let everyone go to Britain. According to the latest information, Beijing is going to block Boris Johnson's proposal by simply not recognizing the British foreign passports of everyone who wants to leave China. The Chinese Foreign Ministry officially stated: "The UK was the first to break the promise, so China will consider not recognizing the British national foreign passport as a valid document for travel." In general, it seems that the battle for Hong Kong is just beginning, and the world is on the verge of a new crisis.

At the same time, China itself has serious claims to the UK. Recall that initially it was the Chinese company Huawei that was supposed to develop a 5G network in the Foggy Albion. However, at the very last moment, Boris Johnson refused the services of this company, not without the help of Donald Trump, who has long waged a diplomatic, economic and espionage war against this company Huawei and China in general. The EU countries are also inclined to the same decision. China believes that this was not without Washington's intervention and now threatens to impose retaliatory sanctions against Nokia and Ericsson, which may develop 5G networks instead of Huawei. No open threats have been made yet, however, some insider sources report exactly this. In addition, the Chinese government is considering banning the export of products of these two companies produced in China, which will mean a full-scale economic war. Thus, the EU is also now in a completely incomprehensible situation. After all, it is possible to transfer the production of Nokia and Ericsson companies from China, but all this will take a long time, require multi-billion-dollar investments, and it is also possible that Beijing will be happy to put sticks in the wheels. However, official China rejects such scenarios and assures that it is not going to launch any wars against the Finnish and Swedish telecommunications companies.

Meanwhile, experts at the London school of Economics predict the biggest drop in the British economy in the country's history. Experts note that Brexit and the absence of an agreement may affect those sectors of the economy that emerged relatively unscathed from the "coronavirus crisis". The report notes that it does not matter whether Boris Johnson is able to negotiate a trade agreement with the European Union or not, if barriers and restrictions on trade arise between the bloc and the Kingdom, this will in any case have a negative effect.

At the same time, nothing interesting in economic terms is happening in the UK. There is no new information about the progress of negotiations between London and Brussels, that is, on the topic that most worries traders right now. Macroeconomic statistics are also not planned for this week, so traders can trade only on the basis of technical factors and the fundamental background from overseas, which has not changed at all in recent weeks. This is probably why the nature of the movement of the pound/dollar pair has not changed in recent weeks. As for the macroeconomic background from overseas, yesterday's Fed meeting brought traders some important and interesting information. The Fed left the key rate unchanged, as expected by traders. No more reports were scheduled for Wednesday.

On Thursday, the United States will release the key report of the week - on GDP for the second quarter. True, this is not the final value of the indicator, it may still change, but, you must agree, when the forecast promises -35%, it is unlikely that anything will change dramatically in the next month or two, during which the report can still be adjusted. In fact, this report alone may be enough to send the US dollar into a complete "knockdown". However, there is another side to the coin. The US dollar has been falling non-stop for quite a long time. And it falls not only because of the weakness of the US economy at this time, and not only against the pound. Thus, there is reason to assume that traders will ignore all of today's reports from America. Why do the pair's bulls need additional macroeconomic support, if they are already busy buying without it? Against the background of the GDP report, data on applications for unemployment benefits and personal consumption expenditures look absolutely not interesting.

Thus, at this time, we do not see how the upward trend for the pound/dollar pair can end. To be more precise, what exactly needs to happen in order for it to end. Most likely, it will end without any high-profile events, just when the bulls get enough and remember that the situation with the British economy is not much better than with the American one. Then the British currency will not have to be envious, since it has not lost its potential for falling due to Brexit and the lack of desire for London to negotiate with Brussels, and not to put ultimatums.

analytics5f220f0b55622.jpg

The average volatility of the GBP/USD pair continues to remain stable and is currently 101 points per day. For the pound/dollar pair, this value is "average". On Thursday, July 30, thus, we expect movement within the channel, limited by the levels of 1.2893 and 1.3095. Turning the Heiken Ashi indicator downwards will indicate a new round of downward correction.

Nearest support levels:

S1 – 1.2939

S2 – 1.2878

S3 – 1.2817

Nearest resistance levels:

R1 – 1.3000

R2 – 1.3062

Trading recommendations:

The GBP/USD pair continues to move up on the 4-hour timeframe. Thus, it is recommended to stay in purchases of the British currency with the goals of 1.3062 and 1.3095 (the level of volatility on Thursday), until the Heiken Ashi indicator turns downwards. Short positions can be considered no earlier than fixing the price below the moving average with the first goal of 1.2756.

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