25.10.202202:43 Forex Analysis & Reviews: Overview of the GBP/USD pair on October 25, 2022

The GBP/USD currency pair also traded quite calmly on Monday. The day and the trading week began with a "gap" of 100 points, easily closed during the day, as often happens. Of the interesting macroeconomic events, only the indices of business activity in the service and manufacturing sectors can be distinguished, which have once again fallen. Thus, the fall of the British pound itself is also quite logical. But, as in the case of the euro currency, it is more interesting now how and where the pound will move next. Please note that after rising by 1100 points a few weeks ago, there have already been two attempts to continue the potential upward trend. The first one ended near the Murray level of "7/8"-1.1414, below the last local maximum. The second (yesterday) also ended near the level of 1.1414. That is, even taking into account the growth of 1100 points, the pound failed to update its recent local peaks. And this suggests that the global downward trend cannot be considered complete.

As we have already said, the critical line on the 24-hour TF is now the key support for the British currency. We managed to gain a foothold and hold on. Therefore, the pound still retains a good chance of a new upward trend. But how to start or continue it if the fundamental background remains weak? The pound ignored seven increases in the BA rate. What is the probability of a new increase? Whatever it may be, it will work out with growth. Liz Truss has resigned from her post, but where is the guarantee that Sunak's cadence will be more productive and effective? Sunak is a financier, and there is no doubt that he will restore order to the economy. But in addition to the economy, geopolitics and other areas require maximum attention and control. When you ignore any area, you can ask Boris Johnson, who refused to attach importance to it in the first months of the pandemic. And then it turned out that there are no EVL devices in British hospitals, many medicines, and even banal syringes. The UK occupied the first place among European countries in terms of the number of diseases and deaths almost all the active time of the pandemic. So Sunak (if he wins the election) is not a panacea. And even more so, it cannot be said that the arrival of Sunak is good for the pound.

Boris Johnson flew to London and refused to participate in the elections.

There is some more serious force behind British public politicians. Recall that at the beginning of last week, Liz Truss said in an interview with Bloomberg that she would not resign. On Thursday, she announced that she was resigning. Having learned this "joyful" news, Boris Johnson interrupted his vacation in the Dominican Republic and rushed to London. However, the very next day, it became known that he would not take part in the elections, although, according to him, he had the necessary 100 votes from the Tories. It seems that someone in the shadows, but with great influence, prompted Truss to leave her post and cooled Johnson's ardor. Of course, we won't know who it is, but so far, we can say that this force wants Rishi Sunak to become prime minister on the second attempt.

What exactly cannot be said about the former finance minister is the presence of charisma. The country should be headed by a leader who enjoys the trust and popularity of the population. Johnson, for example, was not very popular, but he was charismatic and able to energize and push through the necessary decisions in the country's interests. What will come out of Sunak is still unclear. Just a few months ago, he lost the election to Liz Truss; most Conservatives did not want to see him as prime minister. Now, they will have to cast their votes for Sunak because there is no one else to vote for. Penny Mordaunt, who dropped out of the race even earlier than Sunak at the last election, has officially joined the fight, and few people believe in her victory. In Britain, everything is as usual, without a political pun.

The average volatility of the GBP/USD pair over the last five trading days is 182 points. For the pound/dollar pair, this value is "very high." On Tuesday, October 25, thus, we expect movement inside the channel, limited by the levels of 1.1098 and 1.1464. A reversal of the Heiken Ashi indicator upwards will signal a new round of upward movement.

Nearest support levels:

S1 – 1.1230

S2 – 1.1169

S3 – 1.1108

Nearest resistance levels:

R1 – 1.1292

R2 – 1.1353

R3 – 1.1414

Trading Recommendations:

The GBP/USD pair has started a new downward movement in the 4-hour timeframe. Therefore, at the moment, buy orders with targets of 1.1414 and 1.1464 should be considered in case of a reversal of the Heiken Ashi indicator upwards. Open sell orders should be fixed below the moving average with targets of 1.1169 and 1.1098. At this time, the probability of a "swing" is high.

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 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.