08.07.202207:13 Forex Analysis & Reviews: Overview of the GBP/USD pair. July 8th. Boris Johnson has resigned. There is another political crisis in the UK.

On Thursday, the GBP/USD currency pair managed a slight increase. And that is all there is to know about how the market processes fundamental facts. Recall that the last two days have been quite challenging for the United Kingdom in terms of politics. This will be discussed later, but when a country's leadership changes and another political crisis erupts, this cannot be regarded as a positive element for the national currency. Someone might argue that politics and the economy are unrelated, but we disagree. Political stability is essential for the stability of the entire nation, including the economy. Now that a new prime minister will take office, it is probable that the country's development trajectory could shift; there will be adjustments. Consequently, the economy may also be negatively affected by these disturbances. Who among investors would be interested in an economy where the previous two prime ministers could not even sit till the end of their terms?

Since 2016, when the British decided by a narrow majority that life outside the European Union would be preferable, the United Kingdom has been "storming." Years of discussions on the Brexit agreement, which was finally signed five minutes before the chimes "on the knee," Theresa May's resignation, Boris Johnson's resignation, issues with the "Northern Ireland protocol," and Scotland's determination to leave the United Kingdom as quickly as possible. Let's be frank: the outlook is mediocre. And how can the British pound remain stable and strong if the country could lose a third of its territory in the future years, and it is far from certain that a new prime minister will be an improvement over the previous one? Although the British pound fluctuated marginally on Thursday, nothing has changed. The market remains uninterested in the actions of the Bank of England, which may raise rates for the sixth consecutive time in early August.

Boris Johnson must go!

A few weeks ago, Johnson could have quit. Therefore, we began the appropriate paragraph yesterday in preparation for an announcement that the British Prime Minister will continue his position. However, it was also revealed yesterday that at least 36 ministers and their assistants resigned in the wake of famous British politicians Rishi Sunak and Sajid Javid. Initially, the conservative MPs desired to amend a few provisions of the current law to commence the procedure for declaring another vote of no confidence (this could not be done within 12 months since the previous attempt ended in failure and Johnson received "immunity"). Boris Johnson had little choice but to leave when nearly all high-ranking officials submitted resignation letters, which signified a refusal to work under his supervision. As he mentioned the day before,

As it will take time to pick a new leader of the Conservative Party, who will automatically become the new Prime Minister, it is now unknown how much longer Johnson will continue at the country's helm. Additionally, Defense Minister Ben Wallace is viewed as the frontrunner for the position of Conservative leader. Despite personnel changes in the British administration, one of the first statements made by Boris Johnson following the news of his resignation was a pledge not to abandon Ukraine. Multiple high-ranking officials assured London they would continue to back Kyiv, as all British political parties are united on this topic. Therefore, Johnson's resignation is unlikely to affect Europe's geopolitical position significantly. However, we must acknowledge that following Johnson's departure, a lot of problems can be rectified, given Johnson's unorthodox style and mannerisms, which are reminiscent of Donald Trump's. Under Johnson, negotiations with the European Union reached a deadlock, and ties with Russia not only deteriorated but deteriorated to the point of open hostility and confrontation. In any event, the upcoming weeks will be quite exciting, as the question of who will become the next prime minister will be resolved. And now, at the beginning of August, the Bank of England will hold a fresh meeting at which the rate may be increased by 0.5 percent.

148 points is the average volatility of the GBP/USD pair over the last five trading days. This value for the pound/dollar combination is "high." Therefore, on Friday, July 8, we anticipate movement inside the channel, constrained by the levels of 1.1848 and 1.2142. The downward reversal of the Heiken Ashi indicator signifies the continuation of the decline.

Nearest support levels:

S1 – 1.1963

S2 – 1.1902

S3 – 1.1841

Nearest resistance levels:

R1 – 1.2024

R2 – 1.2085

R3 – 1.2146

Recommendations for Trading:

The GBP/USD pair has begun to shift over the 4-hour period. Therefore, new short bets with targets of 1.1902 and 1.1842 should be explored if the Heiken Ashi signal reverses to the downside. When the price is above the moving average, open buy orders with goals of 1.2085 and 1.2142.

Explanations for the figures:

Channels of linear regression – aid in determining the present trend. If both are moving in the same direction, the trend is now strong.

Moving average line (settings 20.0, smoothed) – determines the current short-term trend and trading direction.

Murray levels serve as movement and correction targets.

Volatility levels (red lines) represent the expected price channel the pair will trade within over the next trading day, based on the current volatility indicators.

CCI indicator — its entry into the oversold area (below -250) or the overbought area (above +250) indicates a trend reversal.