InstaForex

October 7, 2021

Overview of the GBP/USD pair. October 7.

 Technical details: 

Higher linear regression channel: direction - downward. 

Lower linear regression channel: direction - downward. 

Moving average (20; smoothed) - sideways.


The British pound, paired with the US dollar, consolidated above the moving average line. Yesterday, the pair's quotes fell below the moving average, although in this case, the downward movement did not last long. Thus, in general, we can say that the pair is currently located in the moving area. Thus, it can move in any direction. Therefore, you need to be careful when opening any medium-term positions. We remind you that in the last week and a half, the pound/dollar pair has been almost 100% dependent on the factor of the fuel crisis in the UK. At first, the pair collapsed by 300 points amid reports of the beginning of the fuel crisis and gasoline shortages at gas stations. Then the pound very quickly leveled almost all of its losses when reports of an improvement in the situation began to arrive (the military joined the case on the orders of Boris Johnson). But now, when the topic of the fuel crisis can be considered complete, the markets are facing another million-dollar question: what to do next with the British pound? Recall that the European currency continues to move down quite confidently. In theory, one would expect further growth of the dollar and pair with the pound. However, we also recall that the European currency has adjusted by almost 50% against the entire upward trend. However, the pound has currently passed a distance of 30%. The pound has adjusted almost twice as weak. Thus, we believe that the pound currently has much more attractive prospects than the euro.


Meanwhile, British Prime Minister Boris Johnson is in touch with the public, to whom there have been a lot of questions lately. In particular, it is related to the same gasoline that the country turns out to have, but there are no truck drivers to distribute it at the gas station. Also, as soon as the fuel crisis began, many media outlets said that it was just part of a much larger and more significant logistical crisis. There were not enough drivers catastrophically in the retail fuel sector and throughout the country. According to various estimates, there is a deficit equal to 100,000 drivers. And at the same time, some experts made an even sadder statement that the logistics crisis is also part of a much larger and large-scale crisis called "labor shortage in the most difficult and unpopular professions." It turned out that the country lacks drivers after Brexit and waiters, workers on farms and in the food industry, and many other places. Now, there is no one to do all the work visitors used to do in the country. And after Brexit, migrant workers themselves are in no hurry to get to the UK, since other countries in the European Union are now much easier to get to, and wages there are no lower than in the UK. Boris Johnson also commented on this situation, calling it an "adaptation of Britain." Johnson noted that the price of fuel and some types of food products, which are also in short supply due to logistical violations, is rising across the country. However, when asked about the shortage of trucker drivers, Johnson said that there are not enough drivers now in the UK and some European countries, China, and the USA. However, from the USA and Europe, we have not recorded any such reports about a shortage of drivers. Boris Johnson also did not say how long problems with the supply of gasoline, gas, and some types of food products will persist, but expressed hope that Christmas this year will be better than the previous one. The British Prime Minister also said that his government could raise taxes again, as "it does not want to treat public finances irresponsibly."


The average volatility of the GBP/USD pair is currently 101 points per day. For the pound/dollar pair, this value is "high." On Thursday, October 7, we expect movement inside the channel, limited by the levels of 1.3471 and 1.3671. A reversal of the Heiken Ashi indicator upwards will signal a possible resumption of the upward movement.


Nearest support levels: S1 – 1.3550 S2 – 1.3489 S3 – 1.3428 

Nearest resistance levels: R1 – 1.3611 R2 – 1.3672 R3 – 1.3733


Trading recommendations:


The GBP/USD pair on the 4-hour timeframe has consolidated back below the moving average. Thus, at this time, it is necessary to keep open short positions with targets of 1.3489 and 1.3471 levels until the Heiken Ashi indicator turns up. Buy orders should be considered again if the price is fixed lower and higher with targets of 1.3611 and 1.3672 and keep them open until the Heiken Ashi turns down.