08.05.202003:21 Forex Analysis & Reviews: Overview of the GBP/USD pair. May 8. The UK begins trade talks with the US. China responds harshly to the accusations of the United States.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - downward.

CCI: -154.7020

The British pound on the fourth trading day of the week also worked out the lower border of the side channel (the Murray level of "1/8"-1.2268), in which it consolidated in recent weeks, also rebounded from it, and also began an upward correction. Thus, both major currency pairs have 100% worked out their consolidation channels and are now ready to grow to the upper limits of these channels. In the case of the British currency, this is the Murray level of "7/8"-1.2634. It is recommended to consider the option of forming a downward trend not earlier than fixing below the level of 1.2268. But overcoming the moving average line will significantly increase the probability of further upward movement and testing our hypothesis.

The results of the Bank of England meeting were disastrous but absolutely expected. What else could you expect from the British regulator, if not failed forecasts for the fall of the economy in 2020? Also, in the near future, the BA Monetary Committee may decide to increase the asset repurchase program from the current 645 billion pounds to 100 or 200 billion. The head of the British Central Bank, Andrew Bailey, confirmed yesterday that he was ready to expand the stimulus package "if necessary." In addition, Mr. Bailey noted government programs to stimulate the economy and noted that "the Central Bank has not yet exhausted its monetary policy tools and will continue to take appropriate measures." "No matter how the economic outlook changes, the Bank of England will always do everything to ensure monetary and financial stability, which is necessary for long-term prosperity and meeting the needs of the UK population," Bailey concluded.

At the same time, it is reported that the British government has begun negotiations with America regarding the conclusion of a transatlantic trade deal. We talked about a trade deal with the United States last year. After all, this is what Boris Johnson wanted to achieve by implementing a "hard" Brexit – the ability to independently decide the future of the country and not depend on the EU in any matter. Now, after almost a year, nothing has changed in the intentions of the British government. Boris Johnson again refused to postpone the completion of the "transition period", Michel Barnier accused London of delaying negotiations and the lack of counter-proposals. Now it has become known that London is starting negotiations with Washington. The first round of negotiations begins today and will last for two weeks. As in the case of Brussels, negotiations will be conducted via video link due to the "coronavirus" pandemic. International Trade Minister Elizabeth Truss said that the UnitedStates is a major trading partner of the UK and increasing trade turnover with them will help the country overcome the difficulties caused by Brexit and the COVID-2019 pandemic. Earlier, the UK Department of International Trade estimated that the effect of a trade deal with America could reach 3.4 billion pounds over the next 15 years. The US Chamber of Commerce recommended that the UK conclude a trade agreement with the European Union as soon as possible in order to start promoting US-British business and investment ties as quickly as possible.

Meanwhile, in the United States, the total number of cases of infection with "coronavirus" reached 1 million 230 thousand, the number of deaths – 73.5 thousand. That, however, does not prevent Donald Trump from also zealously insisting on ending the quarantine and restarting the economy. The topic of the investigation about China's role in deliberately spreading the virus and not preventing it, as well as misinformation, has subsided a little. The American President promised to provide all the necessary information in the coming weeks. But US Secretary of State Mike Pompeo in one of his last interviews said that he was not sure that the COVID-2019 virus came from a Chinese laboratory. Mr. Pompeo complained that China did not allow American scientists to enter the Wuhan laboratory. The Secretary of State has already forgotten that a week earlier he himself declared "irrefutable evidence" of China's guilt. Thus, even in the highest political circles of the United States, there is no consensus on where the virus came from and what triggered its spread around the world. I must say that the constant contradictory statements on the topic of China's guilt do not add confidence to the American official position and the position of Donald Trump personally. Members of the US government regularly change their own testimony, and more knowledgeable people regularly refute their testimony. For example, the country's chief epidemiologist, Anthony Fauci, has repeatedly refuted Donald Trump's claims regarding the "coronavirus". At the same time, the Chinese Ministry of Foreign Affairs issued an official statement advising Washington to take responsibility for the unsuccessful fight against the epidemic in the United States. According to the Chinese authorities, the United States needs to learn from the mistakes made in the first months of the fight against the virus and focus on correcting the situation and containing the epidemic. Donald Trump just yesterday compared the situation with the "coronavirus" to the attacks on the military base of Pearl Harbor in 1941 and the terrorist attack on September 11, 2001, calling it "much more terrible." Chinese Foreign Ministry spokesperson Hua Chunying responds: "The US claims that the COVID-19 pandemic can be compared to the attacks on Pearl Harbor and the September 11 terrorist attack, but now the US enemy is a virus. The United States needs to work with China to fight the disease instead of being enemies because only the joint efforts of the international community can win the fight against coronavirus infection." The US should focus on the fight against coronavirus, and not blame China for what is happening. As you may have noticed, since the outbreak of the coronavirus, China has been acting in an open, responsible and transparent manner, we have taken the most comprehensive measures to contain the spread of the pandemic, and we are sharing our experience and information with WHO, other countries and regions, including the United States," said Hua Chunying. "China was able to contain the spread of the virus and bring the epidemic under control in just over two months, and the United States has already had more than 1.2 million confirmed cases. What has the US been doing over the past months?" the diplomat summarizes.

Yesterday passed for the British pound in multidirectional trading, but technical factors remain the most significant when forecasting movement. We have repeatedly stated that the pound is currently trading in a very wide side channel, as is the euro currency. Yesterday, the pair's quotes fell to the level of 1.2265, and we called the level of 1.2250 - the lower border of the channel. Thus, at this time, the pound/dollar pair can turn up and start moving towards the upper border of the channel - the level of 1.2640. Only a confident overcoming of the area of 1.2200-1.2250 can trigger the formation of a new downward trend.

The average volatility of the GBP/USD pair continues to decline and is currently 106 points. This is not too much for the pound, and there are no signs of increased volatility yet. On Friday, May 8, we expect movement within the channel, limited by the levels of 1.2265 and 1.2477. Turning the Heiken Ashi indicator down will indicate the end of the current correction.

Nearest support levels:

S1 – 1.2329

S2 – 1.2268

S3 – 1.2207

Nearest resistance levels:

R1 – 1.2390

R2 – 1.2451

R3 – 1.2512

Trading recommendations:

The GBP/USD pair started an upward correction on the 4-hour timeframe, which may turn into a movement to the level of 1.2634. Thus, traders are recommended to sell a pair with goals of 1.2329 and 1.2268 only if the price rebounds from the moving average or the Heiken Ashi indicator turns down. It is recommended to buy the pound/dollar pair not before fixing the price above the moving average with the first goals of 1.2512 and 1.2573.

Explanation of the illustrations:

The highest linear regression channel is the blue unidirectional lines.

The lowest linear regression channel is the purple unidirectional lines.

CCI - blue line in the indicator window.

Moving average (20; smoothed) - blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

Heiken Ashi is an indicator that colors bars in blue or purple.

Possible variants of the price movement:

Red and green arrows.