08.12.202105:20 Forex Analysis & Reviews: Overview of the GBP/USD pair. December 8th. Boris Johnson's political ratings are declining. And this is a problem for the British Prime Minister.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

The GBP/USD currency pair also resumed its downward movement on Tuesday, having previously worked out the moving average line once again and bounced off it. Thus, the bulls have again shown their weakness and, consequently, the fall of the British currency may continue with a high degree of probability. In principle, the British currency can now fall for the same reasons as the European currency. Let's be honest, both currency pairs often move in the same direction. And they are often influenced by the same factors, for example, American ones. And at this time, this judgment is very relevant, since the markets can buy the US dollar based on a high probability of tightening monetary policy in the United States. The tightening of monetary policy (and in this case we are talking about accelerating the pace of curtailing the QE program) is a "bullish" factor for the national currency, that is why the dollar is growing now. Unlike the ECB or the Bank of England, the Fed has already embarked on the path of curtailing QE and raising rates. But the European Central banks still cannot boast of anything like this. Take yesterday, for example. There was no fundamental background in either the UK or the US, but in the afternoon, the pound sterling and the euro again found reasons to get close to their annual lows. Similarly, we can say that both currency pairs do not find grounds for a strong upward correction. Moreover, they can hardly gain a foothold above the moving average, and even then not for long. Thus, at this time, the technical picture still indicates that the fall of the British currency may continue. Although we are counting on the formation of a new upward trend.

Boris Johnson is not going to put up with Emmanuel Macron.

Meanwhile, negotiations on the "Northern Ireland Protocol" and the "fish" issue are continuing in the UK. Already this Friday, the ultimatum put forward by Paris to London regarding fishing licenses in British waters should expire. There is reason to believe that if Britain does not meet Paris halfway, this will lead to an even greater deterioration in relations between the two countries. Recall that there is also a "migration" conflict between the countries, which is expressed by a large number of illegal migrants who cross the English Channel, heading from France to the "islands". However, Boris Johnson personally now has problems that call into question his ability to be re-elected for a second term in two years. Of course, that time is still very far away, but it is unlikely that Johnson wants to repeat the fate of his friend Donald Trump. The fact is that according to various opinion polls, the popularity of the Conservative Party has now become lower than the popularity of the Labor Party. So far, we are talking about a preponderance of only one percent, but again, the trend is important. Boris Johnson himself is losing political ratings. At the moment, according to YouGov, he is less popular in the country than Treasury Minister Rishi Sunak. As we have said before, Johnson has won very few victories in his post. He has a huge number of questions about the leadership of the country during the pandemic, the economic consequences of Brexit, and not so long ago he was involved in a corruption scandal with his fellow party members. In general, Johnson is not the most "white" figure in the British parliament. As for relations with Emmanuel Macron, they are likely to remain very strained. Macron also wants to be re-elected for a second term and he will need to do it in April next year. After the United States, Great Britain and Australia signed the AUKUS agreement, which left France out with a $56 billion contract to supply submarines to Canberra, relations with the UK are unlikely to improve. Moreover, Boris Johnson himself is not eager to include diplomatic talent in conversations with the French president and, on the contrary, tries to tease or criticize him every time.

The average volatility of the GBP/USD pair is currently 78 points per day. For the pound/dollar pair, this value is "average". On Wednesday, December 8, we expect movement inside the channel, limited by the levels of 1.3157 and 1.3331. The upward reversal of the Heiken Ashi indicator will signal a new round of corrective movement.

Nearest support levels:

S1 – 1.3214

S2 – 1.3184

S3 – 1.3153

Nearest resistance levels:

R1 – 1.3245

R2 – 1.3275

R3 – 1.3306

Trading recommendations:

The GBP/USD pair continues its downward movement on the 4-hour timeframe. Thus, at this time, it is necessary to remain in short positions with the targets of 1.3184 and 1.3153 levels until the Heiken Ashi indicator turns upwards. Buy orders can be considered in the case of a confident consolidation of the price above the moving average with targets of 1.3331 and 1.3367 and keep them open until the Heiken Ashi turns down.

Explanations to the illustrations:

Linear regression channels - help determine the current trend. If both are directed in the same direction, then the trend is strong now.

Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.

Murray levels - target levels for movements and corrections.

Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.

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.