04.08.202003:07 Forex Analysis & Reviews: Overview of the GBP/USD pair. August 4. Ratings of friends of Boris Johnson and Donald Trump are falling synchronously. The US economy has fallen under Trump, not grown. Trump's main trump card in the election is leveled.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 46.7847

The British pound, as well as the euro, continued to fall on Monday, August 3. If the European currency worked out the moving average line during the day, the pound moved towards it very slowly. However, as in the case of the euro currency, we believe that the British currency is quite overbought at this time, so at least a strong downward correction is needed. We also believe that all the negative fundamental background from overseas ("4 crises") has already been worked out by traders and now is the time to enter the period of consolidation. Thus, we expect that the bears will not sit "on the fence" and will start actively selling the pound/dollar currency pair.

There hasn't been much news coming out of the UK lately. There were none last week. However, this week the results of the Bank of England's meeting on Thursday will be summed up, and the second-quarter GDP report will be published next week.We believe that these two events are extremely important for the pound. If the Bank of England lowers the rate or takes a step in this direction (which will be seen based on the balance of votes among members of the monetary committee), it will be a strong bearish factor for the pound. Recall that in recent months, Andrew Bailey has considered the possibility of further reducing the key rate, and Bank of England economists are studying the experience of other central banks that have gone into negative rates. Therefore, this is a real prospect for the British regulator. Recall that at the moment the rate level is 0.1%. The same applies to the GDP report, which can show a 20% reduction in this most important indicator of the state of any economy. This is certainly not "minus 33%", as in the US, but "minus 20%" is also a lot. This is much more than in any EU country, even in the worst-affected Spain. Thus, we believe that in the coming weeks, sellers will have reasons to get rid of the British pound. And then market participants can remember about the threats to the British economy associated with Brexit and the lack of free trade agreements with the European Union and America. And that Boris Johnson was going to go to Brussels at the end of July to personally hold talks with EU leaders and persuade them to make concessions in the negotiations. August has already begun, and the British Prime Minister has not gone anywhere. And in a month, with the onset of autumn, Johnson may even wind down any negotiations with the EU, as he promised to do earlier. Thus, there are no prospects in this issue. And all this negative for the British currency, traders can remember at once.

In the meantime, we would like to point out (as we have said before) that Boris Johnson's political ratings continue to fall. According to recent polls, Johnson's approval rating is only 37%, while his disapproval rating is 44%. It is reported that back in mid-April, the difference between approval and disapproval was 28 points. That is, the number of approvers was 28 percentage points higher. However, we have already said that the British can strongly regret that they gave all the power in the hands of virtually one person. The British in December last year so much wanted to close the issue with Brexit that they gave their votes to the conservatives just to get out of the EU as soon as possible. As a result, there will be no "soft" Brexit now, and the British economy is preparing for a new shock in 2021, when it will start trading with EU countries under the rules and regulations of the WTO. "Coronavirus" also put its "black" imprint on the popularity of Boris Johnson. If in America, Trump is criticized for the fact that his administration failed to fight the epidemic, the same is imputed to his friend Boris Johnson in the Foggy Albion, where it was still possible to stop the spread of the virus.

In America, at this time, there is still outrage about the proposal of Donald Trump to postpone the election to a later date. Economists have calculated that under Trump, the American economy, thanks to the second quarter of 2020, did not grow, but on the contrary, contracted. Thus, removing Trump's main trump card in the election – economic growth. Also, do not forget about the "coronavirus". And how can you forget, if it is the United States that remains the leader in the world in the number of diseases and deaths from the "Chinese virus". Recent opinion polls have shown that two-thirds of Americans believe that at this time, not even the economy is the most important problem, namely the COVID-2019 epidemic. In fact, Trump's last hope to raise his own ratings and make a real competition for Biden in the election is to develop a vaccine or drug against the "coronavirus". American pharmaceutical companies have three months for everything. But even here, Trump has few reasons to be happy. The fact is that 157 vaccines are currently being developed in the world, but most doctors still continue to say that it is not worth waiting for a drug before 2021. Moreover, it is not enough just to create a drug or vaccine, it still needs to be produced in the right amount. More than 250 million people live in America. If we are talking about a vaccine, we need 250 million doses. It may take a year to produce such a volume of the drug.

On the first trading day of the week in the UK, a report on business activity in the manufacturing sector was released, which did not interest traders. Business activity indices, which are not strong reports even in normal, quiet times, are even less noticeable now. There are no publications scheduled for the second trading day of the week in Britain. On Wednesday, we expect only business activity indices for the services sector. Thus, we believe that now nothing can prevent the pair from continuing to fall, and its further fate will be decided around the moving average. If there is no consolidation below it or it is extremely short-lived, then whatever the fundamental background, we will be forced to state the continuation of the upward trend.

The average volatility of the GBP/USD pair continues to remain stable and is currently 111 points per day. For the pound/dollar pair, this value is "high". On Tuesday, August 4, thus, we expect movement within the channel, limited by the levels of 1.2953 and 1.3175. Turning the Heiken Ashi indicator upward will indicate the resumption of the upward movement of the pair.

Nearest support levels:

S1 – 1.2939

S2 – 1.2817

S3 – 1.2695

Nearest resistance levels:

R1 – 1.3062

R2 – 1.3184

R3 – 1.3306

Trading recommendations:

The GBP/USD pair continues its downward correction on the 4-hour timeframe. Thus, today it is recommended to wait for the completion of the correction and resume trading for an increase with the goals of 1.3184 and 1.3306. Short positions can be considered no earlier than fixing the price below the moving average with the first goal of the Murray level "1/8" - 1.2817.