07.05.202103:09 Forex Analysis & Reviews: Overview of the GBP/USD pair. May 7. Parliamentary elections are being held in Scotland and Wales.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: 6.4095

The British pound was trading extra calmly on Thursday. Until the publication of the results of the Bank of England meeting. Recall that we did not expect any changes in monetary policy from the BA, and the traditional press conference with Andrew Bailey this time was not even planned. Thus, it seemed that the markets would not pay any attention to this event, and the morning report on business activity in the UK services sector would be much more interesting. However, it is not for nothing that we warned that even if no important or new information is available to traders, this does not mean that the market will continue to "sleep." It should be remembered that the market is a collection of traders. And if so, then the human factor has not been canceled.

Moreover, traders and investors can interpret absolutely any information. In reality, it turned out that the pound/dollar pair was trading in an absolute flat for most of the past day, but during the publication of the results, it first jumped down by 50 points, then rose by 80, and fell by 30-40. It returned to its original position within an hour. Thus, in general, the technical picture on the 4-hour timeframe has not changed at all and certainly has not become clearer. All the same, the "swing" mode is still maintained, which just yesterday reached its apogee. As before, the pair's quotes can move in any direction and at any distance. Still, it makes no sense to give forecasts for more than 5-10 hours. Thus, we continue to focus on traders' attention because the pound/dollar now remains one of the most unattractive instruments for trading.

Let's go back to the Bank of England meeting and its results. The key rate remained at 0.1%, the volume of the asset repurchase program at 895 billion pounds. All nine members of the monetary committee decided not to change the parameters of monetary policy unanimously. Thus, the British regulator will continue to adhere to stimulating the economy until the inflation rate reaches a stable 2%. The economy does not reach pre-crisis values. The regulator also expects GDP growth of 7.25% in 2021 against the background of the abolition of coronavirus restrictions and high rates of vaccination of the UK population. "The outlook for the economy, especially regarding changes in supply and demand, remains uncertain. They continue to depend on the development of the pandemic, measures are taken for public health, and how households, businesses, and financial markets will respond to these events," the BA said in its final communique. "The economy is currently experiencing a period of high GDP growth and high inflation, slightly exceeding the target level, after which both the growth rate and inflation will fall. The Bank of England's monetary committee will focus on the medium-term outlook for inflation, including the balance between supply and demand, rather than temporary factors. The Monetary Committee will continue to closely monitor the situation and take all necessary measures to exercise its authority. The committee does not intend to tighten monetary policy until there is clear evidence that significant progress has been made and inflation has reached a stable 2 percent level," the regulator said in an accompanying statement. Thus, as we can see, the Bank of England's rhetoric remains unchanged.

We should also not forget that the parliamentary elections began in Scotland yesterday. Elections are now taking place all over the UK. In particular, the mayors of London and Birmingham are being elected and parliamentary elections in Wales. The media is confident that the future referendum on the independence of this country from the United Kingdom will depend on the results of the elections in Scotland. So far, of course, there are no results, but the Scottish National Party will almost certainly win. The only question is how many votes it will get and how many votes the other two "separatist" parties will get. Roughly speaking, it is important to understand how many parliamentary seats will be available to parties that promote the idea of independence from England and return to the European Union. After all, further negotiations with Boris Johnson will depend on how many votes these parties will gain. If the separatists' victory, as the media call them, is deafening, then the First Minister of Scotland, Nicola Sturgeon, will be able to say that the people have already voiced their will. Otherwise, all the parties-supporters of the referendum would lose the election. In general, do not guess because the results will be known before the end of this week.

The pound, by the way, has not yet reacted to all this news. It is now difficult to say what the pound is responding to and whether it is reacting to anything at all. The "swing" is preserved on almost all timeframes. There is no clear trend on any timeframe. Therefore, it is still very difficult to trade the pair. We recommend looking for opportunities to open trading positions on the smallest TF, where trends can still form, although very short-term. However, these are better than none. On the daily timeframe, it is visible that the pound/dollar pair has been trading between the levels of 1.3700 and 1.4000 for more than two months. Thus, even on the most senior TF, there is no trend. At the same time, the pair remains near its 3-year highs.

The average volatility of the GBP/USD pair is currently 99 points per day. For the pound/dollar pair, this value is "average." On Friday, May 7, we expect movement within the channel, limited by the levels of 1.3791 and 1.3989. A reversal of the Heiken Ashi indicator to the top may signal a new round of upward movement within the "swing."

Nearest support levels:

S1 – 1.3885

S2 – 1.3855

S3 – 1.3824

Nearest resistance levels:

R1 – 1.3916

R2 – 1.3947

R3 – 1.3977

Trading recommendations:

The GBP/USD pair has started a new round of downward movement on the 4-hour timeframe. Thus, today it is recommended to trade down from the target of 1.3824 until the Heiken Ashi indicator turns up. Buy orders should be opened in the event of a reversal of the Heiken Ashi indicator to the top with a target of 1.3947. Also, given the continuing "swing," it is not the worst decision to refrain from trading the pair for a while.