Overview of the GBP/USD pair. April 23. What is happening in Northern Ireland and how can it affect the whole of the UK? - Kakiforex.com - Financial Market Media No. 1 in the World Overview of the GBP/USD pair. April 23. What is happening in Northern Ireland and how can it affect the whole of the UK? Overview of the GBP/USD pair. April 23. What is happening in Northern Ireland and how can it affect the whole of the UK?
InstaForex

April 24, 2021

Overview of the GBP/USD pair. April 23. What is happening in Northern Ireland and how can it affect the whole of the UK?

 Technical details: 

igher linear regression channel: direction - sideways.

 Lower linear regression channel: direction - upward. 

Moving average (20; smoothed) - sideways.

 CCI: -65.2336


The British pound has started a new round of downward movement. At first, it seemed that everything would end with a banal pullback down and the resumption of the upward trend. However, the scales are tipped towards a new round of downward movement within the "swing". We have already said that the pound/dollar pair has been moving "up/down" in recent weeks, passing 250-300 points in each direction. And this type of movement is reasonably expected for the British pound since it has regularly shown such movements in the last 6-7 months. Thus, with the continuing upward trend, the pair can continue to pass 300 points in different directions, which significantly complicates trading on the 4-hour timeframe. However, the pound has long ceased to surprise. The UK currency has risen in price by a total of more than 30 cents over the past year, with a failed fundamental background. If at first (in the first half of 2020) the growth of the pound could be explained by the fall of the US currency since there were "four types of crises" in the States at that time, then starting from the autumn of 2021, the British pound had no reasons for growth. We mean the fundamental ones. Even then, the American economy began to recover at a rapid pace. The election ended with the victory of Joe Biden and the Democrats, so the "toxic" Donald Trump began to retire, the social crisis caused by several racist scandals ended. But in the UK, the chaos associated with Brexit continued, the epidemic continued, the "lockdown" continued, and the pound managed to continue to grow with all this. And since 2021, the consequences of Brexit have become visible, which also negatively affected and will continue to affect the state of the British economy. And the pound sterling, even, in this case, failed to correct usually, continuing to remain close to its 3-year highs near the 42nd level. There are many questions about the British pound, so when the following illogical movements begin, it remains only to accept them in the form they are. The entire list of factors that currently affect the pound is expressed in only two ways. The first is an excessive increase in the money supply in the United States. The second is the "speculative factor" for the British pound. All other news, events, and reports are practically irrelevant.


Therefore, what is happening now in Northern Ireland remains almost without attention from the markets. Although this is very strange because we are talking about a geopolitical conflict that can turn into, if not a war, then severe and bloody clashes on the island of Ireland. Recall that the whole essence of the conflict lies in the difference in the geopolitical points of view of Catholics and Protestants living on the island. The former want to reunify Ireland and independence from Great Britain, and the latter want to remain part of the United Kingdom. Thus, with the UK's exit from the European Union, a border or some semblance should have appeared between the two countries, where many want to reunite with each other. Boris Johnson's plan assumed that there would be no border in the physical sense of the word. There will be specific customs points, passport control, inspections, and checks, but all this will occur in particular places, and the formal border will generally pass by sea. It seems that there is a border, but for the population of the island of Ireland, it does not seem to exist. However, as soon as the UK finally left the EU, it became clear that what looked great on paper is very poorly implemented in real life. Also, the life of Northern Ireland largely depends not only on the UK but also on its "southern sister". Now, Ireland remained in the EU, but Northern Ireland left the European Union, which closes the access of the latter to the market of the former. And all this is accompanied by a pandemic, an economic crisis. Also, it adds fuel to the fire of Scotland, which is not going to put up with life outside the EU and intends to leave the Kingdom in the next 2.5 years. Therefore, many in Northern Ireland, especially people under 45, are also thinking about a possible referendum and secession from Britain. So far, they are not the majority. According to various estimates, 40-45% of the total population. However, their number may grow over time. Recall that in 2016, 52% of UK residents voted "for" leaving the EU. 48% wanted to stay in the EU. Thus, potentially, London now has two more severe problems, which can turn into irreversible consequences in the coming years. It is hardly necessary to say the loss of the UK itself of its territories in Scotland or Northern Ireland. It is scarcely necessary to say that the outbreak of a new conflict on the island of Ireland can turn into bloody battles for many years and even decades. And it is hardly necessary to say that all these events will not increase Britain's international reputation and improve its economic situation.


The pound/dollar pair ignores all these data and events so far and prefers to trade in a "swing" mode. Thus, you can not pay attention to all the events in Scotland, Ireland, Northern Ireland, and even the UK. But it should be remembered that sooner or later, the markets may "remember" them. And this can trigger a sell-off of the British currency and a drop in the investment attractiveness of the UK in the eyes of international investors.


The average volatility of the GBP/USD pair is currently 116 points per day. For the pound/dollar pair, this value is "high". On Friday, April 23, we expect movement within the channel, limited by the levels of 1.3723 and 1.3955. A reversal of the Heiken Ashi indicator to the top can signal a round of upward movement within the "swing".


Nearest support levels: S1 – 1.3794 S2 – 1.3733 S3 – 1.3672 

Nearest resistance levels: R1 – 1.3855 R2 – 1.3916 R3 – 1.3977


Trading recommendations:


The GBP/USD pair started a round of downward movement on the 4-hour timeframe. Thus, today it is recommended to stay in short positions with targets of 1.3794 and 1.3733 until the Heiken Ashi indicator turns up. Buy orders should be opened to overcome the moving average with the targets of 1.3916 and 1.3955 and keep them open until the Heiken Ashi indicator turns down.