19.10.202206:24 Forex Analysis & Reviews: Overview of the GBP/USD pair. October 19. Liz Truss will not resign voluntarily.

The GBP/USD currency pair started a new round of correction on Tuesday but simultaneously remained above the moving average line. We draw the traders' attention to the fact that the lower linear regression channel has already turned upward, and the price managed to stay above the Kijun-sen line on the 24-hour TF. From our point of view, these technical points can continue to contribute to the growth of the British currency. The fact that the price again fails to update its last local maximum speaks against further growth. This is visible even with a cursory glance at the 4-hour TF. And what do we have? No matter how strong the last round of the pound's growth was (more than 1100 points), each subsequent peak is still lower than the previous one. And this is a clear sign of a downward trend. Thus, the pound has made a confident step toward the end of the long-term downward trend, but it is too early to say that it is 100% complete.

Every day, we talk about the same thing: complex geopolitics and a complex foundation for the British pound. This is not because there is no other news, but because these two factors have devastated the pound in the last 7-8 months. If they have provoked the fall of the pound for such a long period in the past, then why should they stop doing it now? We have already said that if the last round of the pound's fall had not happened (by 1000 points in a few days), there would not have been a similar increase of 1100 points. We believe these movements were random, which the market initially did not count on. Recall that the pound collapsed to its absolute lows after the possible consequences of the "tax plan" became known, which could lead to a collapse in the economy and a huge budget deficit. Therefore, if we delete this movement, we have the same thing as before: a clear downward trend.

Liz Truss admitted the mistakes and said she would not go anywhere.

Recently, we have repeatedly talked about Prime Minister Liz Truss, who took office only a month and a half ago, about a possible vote of no confidence, about the failure of the "tax plan." When Truss herself was asked if she could resign, she said clearly: "No!" The BBC published an interview with the British Prime Minister. In it, Truss talks about admitting her mistakes in the first weeks of work at the head of the government and apologizes for them. However, she also reminds us that she is the legitimately elected leader of the Conservative Party. Therefore, she will continue her work for the benefit of the state and the nation. "I tried to help the British with their energy bills and solve the problem of high taxes, but it turned out that we got ahead of ourselves too quickly and sharply," Truss said. "I admit my mistake, and this is a sign of honest politics! And now we need to work further," says Ms. Truss. "I will not resign because I was elected to benefit this country!"

Thus, as we expected, Truss acted according to the "Boris Johnson principle," asking for forgiveness so many times for her misdeeds, mistakes, and scandals involving him that at the end of her term, there was a feeling of premeditation of all these "stories." This was the most logical decision for the Prime Minister, and we believe this topic can now be considered closed. Even if a vote of no confidence is launched, it will take more than 60% of the Conservative vote to pass it. Recall that the Conservatives chose Truss as their leader and prime minister two months ago. If she is removed from office, will it be necessary to hold elections again? This is a political pun. We believe that in the form of conversations about the votes, they make it clear that mistakes can be costly in her post. From now on, she should be more careful and farsighted.

The average volatility of the GBP/USD pair over the last five trading days is 219 points. For the pound/dollar pair, this value is "very high." On Wednesday, October 19, thus, we expect movement inside the channel, limited by the levels of 1.1069 and 1.1508. The upward reversal of the Heiken Ashi indicator will signal the resumption of the upward trend.

Nearest support levels:

S1 – 1.1292

S2 – 1.1230

S3 – 1.1169

Nearest resistance levels:

R1 – 1.1353

R2 – 1.1414

R3 – 1.1475

Trading Recommendations:

The GBP/USD pair has started a new round of correction in the 4-hour timeframe. Therefore, at the moment, new buy orders with targets of 1.1414 and 1.1508 should be considered in the event of a reversal of the Heiken Ashi indicator up or a rebound from the moving average. It is necessary to open sell orders when the price fixes below the moving average with the goals of 1.1108 and 1.1069.

Explanations of the illustrations:

Linear regression channels help determine the current trend. The trend is strong if both are directed in the same direction.

The moving average line (settings 20.0, smoothed) determines the short-term trend and the direction to trade now.

Murray levels are target levels for movements and corrections.

Based on current volatility indicators, volatility levels (red lines) are the likely price channel in which the pair will spend the next day.

The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.