In contrast to the single European currency, the British pound sterling was stronger against the US dollar last week and showed a less intense decline. We will return to the technical picture for the GBP/USD currency pair a little later, but for now, a little information about how the situation with the spread of COVID-19 is developing in the United Kingdom. Last week, a significant increase in daily coronavirus infection was recorded in the UK, comparable to that observed in the spring, during the peak of the epidemic. About seven thousand cases a day - a very significant figure for the United Kingdom. In this regard, British Prime Minister Boris Johnson decided to introduce new restrictions, as well as to increase the contribution to the World Health Organization (WHO) by 30% at once. Meanwhile, protests were held in the UK against the regime of wearing masks and some other restrictions. In some places, even skirmishes with police were recorded. In general, the situation is quite complicated.
If you look at the economic calendar, this week, the UK will receive final data on GDP for the second quarter, which is expected to be very disappointing according to forecasts. However, the main event of this week will be data on the US labor market, which will be published on Friday. I believe that these macroeconomic statistics will determine the results of the current trading week. Well, now it's time to look at the price charts of the pound/dollar currency pair, and let's start with the weekly timeframe.
Weekly
As already noted, on September 21-25, the GBP/USD pair declined, ending the weekly session at 1.2743. If the downward trend scenario continues and the previous lows fall to 1.2674, the next target for the downward trend will be the area of 1.2540-1.2500. This is a fairly strong price zone, where the psychological level of 1.2500 passes, the true breakdown of which will leave no doubt that the market for GBP/USD is dominated by bears. In the meantime, at the moment of writing this article, the pair is trading in a cluster of the Kijun line of the Ichimoku indicator, as well as 50 simple and 89 exponential moving averages. It is quite possible that here the "British" will find support and try to adjust to its previous decline. With this development, the nearest target will be the highs of the previous week's trading at 1.2965. This is a fairly strong technical level, the passage of which will target the pair at 1.3000 and 1.3050. In my personal opinion, only overcoming the last mark and fixing higher will give reason to believe that serious buyers of the British currency have appeared in the market. This will give reason to expect a further strengthening of the pound against the US dollar. However, while such a course of trading can only be assumed, the main scenario looks like a downward one.
Daily
However, on the daily chart, the picture is somewhat different. Starting from September 23, doji candles began to appear, which indicates that the market is tired of the downward scenario and would not mind changing it. Indeed, today, the GBP/USD pair is already trading above the 200 exponential moving average, colored orange. Moreover, the quote is currently in the Ichimoku indicator cloud. If the growth continues, its nearest target will be the maximum trading values at 1.2803. Let me remind you that this mark is extremely important for market participants, and if it is overcome, there is every chance to expect a further strengthening of the GBP/USD. In this scenario, the next target will be near 1.2840, where the 89 EMA and the red Tenkan line converge.
In my personal opinion, the main trading idea for the pound/dollar pair is sales, which are better considered after corrective pullbacks up. I consider 1.2790-1.2840 to be the approximate price zone for opening short positions.
