Overview of the GBP/USD pair. July 9. Boris Johnson's bluff in negotiations with Brussels is not a bluff, but a deliberate

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - upward.

CCI: 225.7567

The British pound resumed its upward movement in the second half of the past day. And since the European currency has also become more expensive, we can conclude that the basis for this movement should again be sought in the United States. However, in the last days, there is nothing supernatural in America that did not happen. Except for the "coronavirus" that continues to spread, as in a crowded minibus, and the already familiar news related to Donald Trump, nothing happened. However, there was nothing supernatural yesterday, and the pound was still getting more expensive. Thus, we still believe that most traders ignore the macroeconomic background, paying attention only to the long-term fundamental one. And it is based on these considerations that all the problems of America, current, and potential, for some time blocked the already well-worn topic of "Brexit". Plus, do not forget that the British currency is very fond of getting more expensive in recent years on rumors and speculation, which in most cases are not confirmed by anything.

Meanwhile, we believe that the key figure in the negotiation process between Brussels and London is not David Frost, but Boris Johnson. While the whole world is wondering whether Johnson's position in the negotiations is a bluff, we believe that this is a bold and slightly reckless, but not a false position of the British Prime Minister. Recall that this week, the next round of negotiations on a free trade agreement began. Not even that. London wants a free trade agreement, and Brussels wants a comprehensive agreement that will define relations between countries in all areas. Boris Johnson first said that the terms of the "transition period" would not be extended. The latest information indicated that the British Prime Minister intends to agree at the end of the summer. This week it became known that the UK, according to Johnson, is ready to trade with the European Union under the rules of the WTO, if "an agreement can not be reached". In principle, no one doubts this option. For if there is no agreement, then there will be no other option for trade relations between the Kingdom and the Alliance. The question is that all economists say with one voice that the British economy will come under another massive blow if there is no agreement. Of course, it will not collapse, but it has already been suffering from Brexit for about 4 years, plus the "coronavirus crisis" and the epidemic itself, which is unclear how it will manifest itself and what other impacts it will leave on the British and world economy. Thus, an additional blow to the British economy was not needed even before the "coronavirus epidemic", and now even more so. However, we remind you that from the very beginning of his reign, Boris Johnson was not only not against, but also for leaving the European Union without any agreements. It was this option that he pushed hard from the very beginning, but it was desperately blocked from time to time by the Parliament. Only under pressure from Parliament, Johnson had to go to negotiate a "deal", which was again blocked by Parliament, considering it not attractive enough for the UK. After the December parliamentary elections, Johnson and his supporters received full carte blanche and immediately returned to the original version, which provided for the severing of all ties with the EU. As a fallback option, Johnson leaves the option of an agreement, but only one that will benefit London. If not, then he will personally be satisfied with the option without any agreements. Thus, it is Johnson who can "swing the rights" in negotiations with the European Union, and we can only guess whether Brussels will make concessions? The latest information also says that the European Union seems to be ready to concede a little in the "fish" issue. However, this is still a rumor that has not been confirmed.

Meanwhile, the "parade of funny stories" continues in the US. Donald Trump, dissatisfied with the work of WHO in the case of "coronavirus", told the US Congress that the country is leaving the organization. However, according to the rules of the organization, the United States will be able to leave it only in a year, that is, on July 6, 2021, when the president of the country, quite possibly, will not be Trump. Naturally, the American President immediately came under criticism from the Democrats. In particular, Senator Bob Menendez wrote on Twitter: "Congress has received a message that the US President has officially withdrawn the country from the WHO. Calling Trump's response to the coronavirus pandemic chaotic and inconsistent is not enough. This decision will not protect the lives or interests of Americans, it will leave them sick and America alone." And the most interesting thing is the "cherry on the cake" - the reaction of Joseph Biden, who immediately announced via Twitter that he would return the United States to the WHO if he won the election. "Americans are safe when America participates in promoting global health. On the first day of my presidency, I will return the United States to WHO and restore our leadership on the world stage," Biden said.

Also, there was a speech by the Minister of Finance of Great Britain Rishi Sunak. He said on Wednesday that the British government has approved a 30 billion pound program that will be aimed at fighting unemployment and reducing taxes for the tourism industry. Under the plan, employers will receive 1,000 pounds for each employee who returns to work from unpaid leave caused by the coronavirus pandemic and quarantine. Also, the UK government is going to spend several billion pounds to create 350,000 temporary jobs for young people aged 18 to 24. This category of British people is called the most vulnerable in the crisis. "Young people have always borne the brunt of the economic crisis, but now they are particularly at risk as they work in the sectors most affected by the pandemic. We understand that youth unemployment has long-term consequences... and we don't want this to happen to this generation," Sunak said. It is also reported that the UK economy may shrink by 14% in 2020, which exceeds the potential losses of both the European and American economies. This is to the question that the additional blow to the economy caused by the lack of a free trade agreement with the EU is unnecessary for the British...

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The average volatility of the GBP/USD pair continues to remain stable and is currently 86 points per day. For the pound/dollar pair, this value is "average". On Thursday, July 9, thus, we expect movement within the channel, limited by the levels of 1.2524 and 1.2696. Turning the Heiken Ashi indicator downward will indicate a new round of downward correction.

Nearest support levels:

S1 – 1.2573

S2 – 1.2512

S3 – 1.2451

Nearest resistance levels:

R1 – 1.2634

R2 – 1.2695

R3 – 1.2756

Trading recommendations:

The GBP/USD pair continues its upward movement on the 4-hour timeframe. Thus, today it is recommended to stay in the purchases of the pound/dollar pair with the goals of 1.2635 and 1.2695 and keep them open until the Heiken Ashi indicator turns downward. It is recommended to sell the pair after fixing quotes below the moving average with the first goals of 1.2451 and 1.2390.

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