Overview of the GBP/USD pair. February 18. "Coronavirus" as the reason for the "divorce" of the UK and Scotland.

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: -16.5289

The British pound has started a new round of corrective movement, but at the same time maintains an upward trend and excellent prospects to work out the level of 1.4000 in the coming days. Who would have thought that the British currency would soar so high at a time when its economy is shrinking. The "coronavirus" has become not a disaster and there may be an "Exit" inside the UK itself in the near future. However, first things first. From a technical point of view, the pound/dollar pair continues its upward movement. If a couple of weeks ago the pair was trading in the "swing" mode, now it is a fairly stable upward trend with small and not too frequent corrections. Well, currency traders have calmed down and started making more informed decisions. However, at the same time, it is still difficult for everyone to answer the question of why the pound continues to grow when there is practically no objective reason for this. Even comparing the pound with the euro, the latter has much more reason to grow against the dollar, although the European currency was well adjusted in January 2020. The pound does not react to anything at all. Even the global factor of "pouring trillions of dollars into the American economy" can not constantly push the quotes in only one direction. There should be corrections. However, there are none. Thus, we are more inclined to believe that the growth factor of the UK currency is purely speculative. Let us take bitcoin as an example. Can anyone give a clear reason for the growth of the number 1 cryptocurrency? It is simply bought by traders, so it becomes more expensive. It's simple. The same is true for the pound, although speculative growth is not too typical for the currency markets.

Meanwhile, the issue of the "coronavirus" continues to be acute for the UK. Although more than 15 million people in the country have already received the vaccine, new strains of the virus continue to be discovered with enviable regularity in the Foggy Albion. New strains have been found in other countries, for example, the most dangerous are the "Brazilian" and "South African" strains. However, at least several new strains have already been found in Britain, and each of them raises concerns among doctors and epidemiologists. Just recently, we wrote about the "Bristol" and "Liverpool" strains, now they have been joined by a strain with the official name B1525. In Britain, 32 cases of infection with the new virus have already been counted, but other countries, such as Denmark, the United States, and Australia, have already reported cases of this strain. It is reported that the new strains may be more resistant to existing vaccines.

However, the "coronavirus" is not just an epidemiological and economic problem for the UK. Scotland, which has said it opposes Brexit since the 2016 independence referendum, is set to hold its referendum as early as 2021. If earlier we repeatedly wrote that the Scots are going to leave Britain because of their unwillingness to leave the EU, now the issue of countering the "coronavirus" on the part of the government is also acute. About 74% of Scots believe that their government has handled the epidemic well. But only 19% of Scots view Boris Johnson's actions positively. And not just the Scots. We have repeatedly written about the fact that the Johnson government was openly criticized for the weak results of countering the pandemic. During the first wave of the "coronavirus" in the Foggy Albion, more people died than in any other country in the European Union. The UK has long been the leader in the total number of cases among all European countries. And now it is in 4th place in the world in terms of the total number of COVID-2019 infections. Thus, many believe that the British government has failed to fight the pandemic.

However, economic problems are in the first place. The most important thing is that both the government and the population themselves believe that they are better off in the European Union than in the UK. Although it is to the UK that about 61% of Scotland's exports and 67% of imports are sent. However, such statistics do not make Edinburgh worry. They cite the example of Ireland, which has rebuilt itself since independence and is now no worse off than before. "As an independent member of the EU, Scotland will be part of a huge single market that is seven times the size of the UK market," said Scottish Economy Secretary Fiona Hyslop.

However, despite the desire of Edinburgh to hold a referendum, we remind you that this desire must be approved by London. Johnson has already spoken out about this, saying that such an important event as the independence referendum in the event of a whole generation and can not be held every five years. Thus, Edinburgh will not get official permission with the same probability that Donald Trump will not get impeached. However, experts believe that there is still a way out of this situation for Scotland. And it's called a "consultative referendum". Simply put, Edinburgh needs the results of the referendum to be recognized around the world, or at least by those countries that will be targeted by foreign trade activities. A consultative referendum is not legal and can be challenged by the British government in court. Moreover, it is potentially an international conflict. However, as the last decade has shown us if someone wants to separate from someone, then usually nothing helps to stop this process. Thus, now Nicola Sturgeon (the First Minister of Scotland) needs to confidently win the parliamentary elections on May 6 and strengthen the position of her party in the Scottish Parliament.

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The average volatility of the GBP/USD pair is currently 75 points per day. For the pound/dollar pair, this value is "average". On Thursday, February 18, thus, we expect movement within the channel, limited by the levels of 1.3779 and 1.3929. A reversal of the Heiken Ashi indicator to the top will signal a possible resumption of the upward trend.

Nearest support levels:

S1 – 1.3855

S2 – 1.3794

S3 – 1.3733

Nearest resistance levels:

R1 – 1.3916

R2 – 1.3977

R3 – 1.4038

Trading recommendations:

The GBP/USD pair continues to adjust on the 4-hour timeframe. Thus, today it is recommended to open new long positions with targets of 1.3916 and 1.3977 if a rebound follows from the moving average line. It is recommended to consider sell orders with targets of 1.3794 and 1.3733 if the price is fixed below the moving average.

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

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