Overview of the GBP/USD pair. May 12. London is not worried about the referendum in Scotland and recommends Nicola Sturgeon to deal with the pandemic. - Kakiforex.com - Financial Market Media No. 1 in the World Overview of the GBP/USD pair. May 12. London is not worried about the referendum in Scotland and recommends Nicola Sturgeon to deal with the pandemic. Overview of the GBP/USD pair. May 12. London is not worried about the referendum in Scotland and recommends Nicola Sturgeon to deal with the pandemic.

May 12, 2021

Overview of the GBP/USD pair. May 12. London is not worried about the referendum in Scotland and recommends Nicola Sturgeon to deal with the pandemic.

 Technical details: 

Higher linear regression channel: direction - downward. 

Lower linear regression channel: direction - upward. 

Moving average (20; smoothed) - upward. 

CCI: 118.9618

The British pound continued to grow on Tuesday, May 11. The pound/dollar pair failed to form a minimal correction – the upward movement continued after a minimal pause and even without a minimal pullback. Thus, the markets continue to buy the pound. Most likely, a whole set of factors is working here again, including the "speculative factor" and the factor of pumping the American economy with trillions of dollars, as well as the "Scottish factor," which is still very difficult to interpret and transfer to real life. The victory of the SNP in the parliamentary elections in Scotland is rather a negative for the whole of the UK and the British currency. However, we faced a negative background from the UK many times, but at the same time, the pound continued to rise in price? Therefore, in May 2021, such a reaction of market participants to the events in the Foggy Albion is not even too surprising. So, for now, you need to take it for granted that the probability of divorce now in England and Scotland in the next 2-2.5 years is quite high. Although many experts and political scientists believe that the referendum should still be agreed upon in the Scottish Parliament, it is not a fact that the supporters of divorce from the Kingdom will win it. We believe that all this is not a problem. If the Scottish people did not want the majority to implement a new independence referendum, Nicola Sturgeon's Scottish National Party would not have consolidated its position in Parliament. The referendum can only be needed by those who want to break up with the UK. The rest do not need it. Therefore, there is no doubt that the referendum will be approved in the Parliament, where 64 seats out of 129 belong to the SNP (only one vote is enough for a "majority government"). There is no doubt that Boris Johnson will not give official permission to hold a referendum. Most likely, the referendum will be held without the approval of 10 Downing Street, and then Boris Johnson and his lawyers will have to prove that such a referendum was illegal. And it is good if those who do not want a "divorce" from the Kingdom win the referendum. Then the court will not be required, and the issue will be closed for many years. But if the ScExit supporters win? Then Boris Johnson will have to explain why the referendum is suddenly illegal if most Scots want to leave the Kingdom? The loss of Scotland to the UK is another blow below the belt. The first was Brexit. The second will be ScExit (Scotland Exit). Will the UK survive two such strikes? It will survive, but its economy will shrink even more. The territory will become smaller. There will be a new relationship between the English and the Scots. In general, all this threatens problems for London. Perhaps some already regret that in the 2016 referendum, the supporters of leaving the EU won by a margin of 3-4%.

At the same time, the British government practically does not comment on the statements of the Scottish leader Nicola Sturgeon about the desire to hold a new referendum. Boris Johnson stands his ground and says that the independence referendum is a generational issue and Scotland cannot hold it whenever it pleases (every 5-10 years). Moreover, according to Johnson, at this time, talk about the referendum is not particularly relevant. The country has just begun to recover from the pandemic after a severe economic crisis aggravated by Brexit, so now we need to focus all our efforts on restoring the economy and returning to normal life. He is also echoed by British government Minister Michael Gove, who openly called on the Scottish National Party to deal with the "coronavirus" and the consequences of the crisis and not talk about a second referendum. Gove also noted that Scots are currently more worried about their work and their children's education, and the "debate about the constitution" does not solve these issues. Michael Gove also believes that most Scots voted for parties that do not want a break with England. The Chancellor of the Duchy of Lancaster has said that London will not sue Scotland and the SNP. Gove did not say why. Nicola Sturgeon responded to Gove's statements as follows. According to the leader of the SNP, no one is going to hold a referendum right now. The authorities of the country are fully focused on the fight against COVID-2019. Even in the framework of the election race, representatives of the SNP repeatedly stated that the priority is the fight against the "coronavirus" and not the referendum. But when the victory over COVID is won, then the government will initiate a referendum.

Thus, the UK is flying at full speed to its collapse, and the pound is flying to conquer new heights paired with the US dollar. Today or tomorrow, the British currency can update the maximum of February 24, which is the 3-year high of the pair. Thus, almost all the losses of the British pound during the "four-year divorce from the European Union" will be leveled in just one year when the fundamental background from the UK was still negative. It is a clear example for traders that sometimes the "foundation" does not play any role. Therefore, you should always pay attention to the "technique" that most quickly responds to any changes in the market.

The average volatility of the GBP/USD pair is currently 98 points per day. For the pound/dollar pair, this value is "average." On Wednesday, May 12, we expect movement within the channel, limited by the levels of 1.4064 and 1.4260. A downward reversal of the Heiken Ashi indicator may signal the beginning of a downward correction.

Nearest support levels: S1 – 1.4099 S2 – 1.4038 S3 – 1.3977 

Nearest resistance levels: R1 – 1.4160 R2 – 1.4221 R3 – 1.4282

Trading recommendations:

The GBP/USD pair is in a strong upward movement on the 4-hour timeframe. Thus, today it is recommended to trade for an increase with the targets of 1.4221 and 1.4260 before the Heiken Ashi indicator turns down. Sell orders should be opened if the pair's quotes are fixed below the moving average with a target of 1.3916.