02.12.202003:31 Forex Analysis & Reviews: Overview of the GBP/USD pair. December 2. The "Scottish" issue is back on the agenda. Nicola Sturgeon has no intention of backing down and is ready to go to the international court of justice.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 242.3208

The British pound has remained in one place for 5-6 trading days, approximately between the Murray levels of "4/8"-1.3306 and "7/8"-1.3397, that is, in a stop-point side channel. Thus, now the pound/dollar pair is completely flat near its annual highs. It seems that traders themselves no longer know which way to trade the pound. In recent weeks, the British currency has continued to grow although there were no fundamental reasons for this. However, as we said earlier, the currency cannot grow forever just on the hopes of market participants that a trade agreement will be signed and the British economy will not sink in 2021. Moreover, it has been said more than once: the British economy will still suffer losses from Brexit, even if a trade deal is agreed upon. Thus, we do not understand the optimism of the markets at all and, as in the case of the euro currency, we believe that the British pound is overbought and unreasonably expensive.

However, in addition to all the economic problems that the UK has already faced or will face in the future, there are also a lot of other very serious issues. One of these is the "Scottish question", which is that Scotland does not intend to leave the European Union. However, since it is part of the UK and subject to London, it will have to do so at the end of 2020, as will Northern Ireland, as well as Wales. However, Scottish First Minister Nicola Sturgeon, who has a very high level of support in her country, has already sent official requests to London several times asking for permission to hold an independence referendum. And she was refused by London every time. Boris Johnson can be understood. Recent social research shows that Scots have changed their mind since 2014. Then, in the independence referendum, they voted to remain in the EU. Now they are ready to vote to become an independent state. Who will voluntarily allow the holding of a referendum that will inevitably lead to the loss of a considerable territory? Plus, Boris Johnson does have a great reason not to grant Edinburgh's request. Such an important state event as a referendum cannot be held every 5 years. Otherwise, this is not a referendum, but a circus. However, Nicola Sturgeon is also right in her way. She believes that in 2014, Scots did not know what Brexit would be, and now they do not support It. Next May, Scotland will hold elections to the local Parliament and, if Sturgeon's party wins a landslide victory, the First Minister is ready to go to the international court of justice to circumvent London's ban on holding a referendum. The second referendum has already been announced. "In May 2021, we will ask the Scottish people to believe that we will continue to build a better country. I will ask for your approval so that the independence referendum is organized quickly as soon as the new Parliament is formed," Sturgeon said. It should be noted that in the current difficult hours, about 72% of Scots approve of the way the Scottish government is handling the pandemic. And this can be a really good tool for a convincing victory in the parliamentary elections.

And of course, you can not ignore the topic of trade negotiations between the UK and the EU, which continues to excite the minds of traders for several months. According to the latest information, both sides understand that it will be impossible to reach an agreement without serious concessions, but no one wants to give in anyway. However, Minister Michael Gove believes that "the EU is asking too much of the UK". "Given the fact that we are leaving the EU, it is simply unfair for European countries to catch as many fish as they want in our waters," Gove said. Gove does not comment on the fact that the UK itself, despite leaving the EU, wants to maintain access to the huge European market without duties and tariffs. "The EU still wants us to be tied to their legislation. The EU wants to reserve the right to impose strict restrictions on us in the event of any disputes, and we don't think this is fair," Gove said. At the same time, France is calling on the UK to "start real negotiations". French President Emmanuel Macron said the EU would not sign a flawed agreement. "We have always said that we strive to conclude a deal, but not at any cost. The European Union must protect its interests, and this is equal competition between enterprises," Macron said.

Thus, "serious differences" remain, and both chief negotiators are very reluctant to share information about the progress of the negotiations. We still believe that the probability of an agreement is very low. Even if Michel Barnier and David Frost agree on a free trade agreement, this does not mean that both parliaments will ratify it immediately. Meanwhile, December has begun, so there is one month left until the end of the "transition period".

At the same time, in December, two coronavirus vaccines may be approved for mass use in the UK. "So far, no vaccine has been approved for use by the Agency for the Control of Medicines and Medical Devices. However, we hope that the Pfizer and BioNTech vaccines, as well as the Oxford and AstraZeneca vaccines, will receive the necessary approvals in the coming days or weeks," said British Prime Minister Boris Johnson.

From a technical point of view, the pound/dollar pair is now completely flat. Thus, we believe that we should wait until it is completed before resuming trading. As before, we do not see any reasons for the further growth of the British pound. But sellers can't take the initiative in any way.

The average volatility of the GBP/USD pair is currently 95 points per day. For the pound/dollar pair, this value is "average". On Wednesday, December 2, therefore, we expect movement inside the channel, limited by the levels of 1.3323 and 1.3513. A reversal of the Heiken Ashi indicator downwards signals a new round of correction.

Nearest support levels:

S1 – 1.3397

S2 – 1.3367

S3 – 1.3336

Nearest resistance levels:

R1 – 1.3428

R2 – 1.3458

R3 – 1.3489

Trading recommendations:

The GBP/USD pair started a new round of upward movement on the 4-hour timeframe. Thus, today it is recommended to stay in long positions with targets of 1.3458, 1.3489, and 1.3513 until the new reversal of the Heiken Ashi indicator down. It is recommended to trade the pair down again with targets of 1.3275 and 1.3245 if the price is fixed back below the moving average line.