23.08.202206:15 Forex Analysis & Reviews: Overview of the GBP/USD pair. August 23. Boris Johnson would have won the election of Prime Minister if he had participated in them.

The GBP/USD currency pair continued its downward movement on Monday, which is also easily classified as a collapse. In the article on the euro/dollar, we have already said that the energy crisis in the European Union, which may begin this winter, is hardly the only reason for the fall of the euro, or at least the main one. And the pound/dollar pair fully confirms this hypothesis. After all, the pound sterling is falling at the same rate as the euro currency, with the same dynamics. However, for some reason, we do not hear that an energy crisis may begin in the UK. Recall that in February of this year, London completely abandoned oil and gas from Russia. Britain had no doubts about this issue, which means it clearly knew what it was doing and understood that oil and gas could be obtained in other countries, not only in Russia. Thus, why is the pound falling now if the gas crisis does not threaten Britain?

As Andrew Bailey has already openly stated, someone may say there will also be a recession in the UK. But there will be a recession both in the European Union and the USA, where it has already begun. Therefore, all three conglomerates are in approximately equal conditions, but the dollar is growing for some reason, and the euro and the pound are falling. We believe that the gas issue is only a small fraction of the list of factors of the fall of European currencies. And the main two problems for the euro and the pound have remained unchanged for a long time. In particular, this is the strongest increase in the Fed rate against the background of a weaker tightening of monetary policy in the EU and Britain and the "geopolitical aspect." If so, the gas issue is just an overblown problem, which does not pose a real danger to the euro and, moreover, the pound. Of course, if gas problems start in the UK, it could hit its economy with a new force. However, remember, a few months ago, all the tabloids trumpeted unprecedented high gasoline prices at British gas stations. They blew the horn and stopped, oil has fallen in price, gasoline prices have stabilized, and there are so many economic problems now that the increase in fuel costs is not even in the top ten in terms of significance.

The Tories are already regretting the vote of no confidence in Johnson.

So, in the next two weeks, we can find out who will become the new leader of the Conservatives and, simultaneously, the new Prime Minister of Great Britain. The voting of the last round has already begun, and about 57% of respondents said they have already made their choice. Among these 57%, 68% chose Liz Truss, and 31% chose Sunaka. Interestingly, many Tories vote for Truss because she demonstrates the "legacy of Boris Johnson" and remained loyal to him even in difficult times for the former Prime Minister. Most conservatives consider Sunak an excellent specialist in finance and economics, but they are not ready to give him the prime minister's chair.

Of those who have not yet voted in the elections, 44% are ready to cast their votes for Truss and 29% for Sunak. 26% are undecided yet. 55% of MPs said the Tories were wrong to dismiss Boris Johnson. If Johnson now participated in the elections on a par with Truss and Sunak, 46% would vote for him, and 24% for Truss and Sunak. What do the results of this social research indicate? That the Tories are fed up with Johnson's antics, who by his behavior casts a shadow on the entire Conservative Party, which may be defeated in the next parliamentary elections because of this. But at the same time, the Tories have not decided who will be able to take Johnson's place while being the same leader and the same charismatic leader. Sunak does not pull for the role of a charismatic leader, and Liz Truss is an excellent politician, but it would be better if she remained Foreign Minister. However, since Johnson has already been forced to leave, conservatives now believe Truss should become Prime Minister. Therefore, we have almost no doubt that the Foreign Minister will win the elections.

The average volatility of the GBP/USD pair over the last five trading days is 127 points. For the pound/dollar pair, this value is "high." On Tuesday, August 23, thus, we expect movement inside the channel, limited by the levels of 1.1623 and 1.1877. The upward reversal of the Heiken Ashi indicator signals the beginning of an upward correction.

Nearest support levels:

S1 – 1.1780

S2 – 1.1719

S3 – 1.1658

Nearest resistance levels:

R1 – 1.1841

R2 – 1.1902

R3 – 1.1963

Trading Recommendations:

The GBP/USD pair continues to be located below the moving average on the 4-hour timeframe. Therefore, at the moment, you should stay in sell orders with targets of 1.1719 and 1.1658 until the Heiken Ashi indicator turns up. Buy orders should be opened when fixing above the moving average line with targets of 1.2024 and 1.2085.

Explanations of the illustrations:

Linear regression channels – help determine the current trend. If both are directed in the same direction, then the trend is strong.

Moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be conducted now.

Murray levels are target levels for movements and corrections.

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

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.