13.05.202105:31 Forex Analysis & Reviews: Overview of the GBP/USD pair. May 13. The UK GDP data does not impress traders.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - sideways.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 20.9711

The British pound fell on Wednesday, as did the European currency. The consumer price index rose by 4.2% year-on-year in April, but instead of a new fall in the US dollar, we saw it strengthen. We will return to this point a little later, but for now, I would like to note that the upward trend in the pound continues as the price continues to be located above the moving average. The long-term and global fundamentals that drove the pound/dollar pair to its current highs remain in play. Several reports on GDP and inflation can not cross out more important factors, such as pumping the US economy with trillions of dollars or the "speculative factor" for the British pound.

Simply put, macroeconomics at this time is very interesting. Macroeconomic reports can trigger a market reaction like yesterday. How much did the US dollar rise against the pound in the first half-hour after the publication of US inflation? By 80 points. Eighty points are quite a lot, but when was the last time there was such a strong market reaction to macroeconomic statistics? Thus, we stand by our opinion. "Macroeconomics" in global terms does not affect the movement of the pound/dollar pair in any way. The "foundation" also has almost no effect since the pound would have to trade around the 30th level and not around the 41st. Therefore, the whole "foundation" and "macroeconomics" at this time are interesting only for intraday trading. In global terms, we believe that the upward trend will continue, as the pair is already approaching the previous local maximum, which simultaneously acts as the 3-year maximum of the pair. We remind you that at the moment, the pair have leveled almost all the losses that it suffered due to Brexit during the previous four years. At the same time, the situation in the UK after the end of Brexit did not improve in any way.

But back to our inflation report, which the markets have been waiting for for so long. There has been so much discussion about this. Everyone was waiting for any action from the Fed. After it became known about the acceleration of the consumer price index to 4.2%, only the lazy will not talk about the Fed's inactivity. We want to draw the attention of traders to one important and interesting fact. The last inflation report was released on April 13 (according to which the indicator rose to 2.6% y/y from 1.7%). Then the pound went down on this report by 20-30 points, after which it resumed growth. But the European currency on the last report on inflation in the United States rose by 20-30 points. Yesterday, the euro/dollar first fell by 40-50 points, then increased by 80, then fell again by 80 points. The movement was identical to the movement of the pound/dollar pair.

What does this mean? The fact that the markets often work out reports in different ways, which are the same. Second – these important reports do not affect the global trend in any way. Thus, inflation in the next month may jump to 6%, which will not affect the upward trends currently observed for the euro and the pound. Moreover, we remind you that a strong acceleration of inflation is a negative factor for the national currency. Rising inflation is bad for the dollar. But, as we can see, the reaction of the markets is now radically opposite. And even such, it can be called with a great stretch. How, for example, to characterize the reaction of traders if the pair on the inflation report first falls by 50 points and then grows by 70, and this is within 20-30 minutes? It was a fall, and then the market participants realized that they were wrong in their actions? Why then followed a new round of downward movement?

You should also pay attention to the statistics from the UK on Wednesday. The monthly and quarterly GDP figures were approximately the same as predicted. In the first quarter, the British economy contracted by 1.5% q/q, and in March – it grew by 2.1%. Do you know how the pound responded to this data packet? A 20-point increase. Suppose such a reaction can be called a reaction at all. Thus, we believe that market participants generally ignored the British statistics, and the pound remained where it was a day earlier.

In Britain, Boris Johnson announced that an independent public inquiry into the government's actions during the coronavirus pandemic would begin in the spring of 2022. Boris Johnson himself said that during such a serious phenomenon as a pandemic, government actions should be studied "under the microscope," and the public has the right to know about mistakes and their consequences. According to the Prime Minister, the government should learn from every crisis or difficulty in the country's life. Recall that in 2020, the UK government was strongly criticized for being slow and indecisive in countering the virus. The country was in first place among European countries in the number of diseases and deaths from COVID. Also, earlier, there was information that Boris Johnson allegedly declared last spring that he was ready to see thousands of corpses from the virus to avoid introducing a "lockdown" in the country.

But for the British pound, all this information is also nothing more than interesting. The pound can not usually correct itself and is marking time in one place for two days. The British currency was not even able to correct normally against the upward trend of 2020 by 2800 points, which is visible on the daily and weekly timeframes. Therefore, we believe that the upward trend will continue in 2021.

The average volatility of the GBP/USD pair is currently 107 points per day. For the pound/dollar pair, this value is "average." On Thursday, May 13, we expect movement within the channel, limited by the levels of 1.3954 and 1.4168. A reversal of the Heiken Ashi indicator downwards may signal a new round of upward movement.

Nearest support levels:

S1 – 1.4038

S2 – 1.3977

S3 – 1.3916

Nearest resistance levels:

R1 – 1.4099

R2 – 1.4160

R3 – 1.4221

Trading recommendations:

The GBP/USD pair on the 4-hour timeframe began to adjust within the upward trend. Thus, today it is recommended to open new long positions with targets of 1.4099 and 1.4160 after the Heiken Ashi indicator turns up or the price rebounds from the moving average. Sell orders should be opened if the pair's quotes are fixed below the moving average with targets of 1.3977 and 1.3954.