The GBP/USD pair also slightly recovered on Friday, while over the weekend, the British pound awaited a new twist of fate. Donald Trump announced that UK Prime Minister Keir Starmer is resigning, and many media sources confirmed that Starmer could indeed leave his post as early as today, Monday. Thus, the British pound came under market pressure from the open of the week. However, we do not consider a prime minister's resignation a valid reason to sell the pound. In Britain, government changes have been a common occurrence over the last 10 years, rather than a political crisis. Prime ministers change like gloves, as none have been able to propose a political and economic course that would receive broad support from the population. Consequently, this week Britain may see its seventh head of government in the last decade. None of the previous prime ministers has completed their term in office. Recall that the British pound fell a few weeks ago when news broke about the collapse of the Labour Party in the elections. The pound cannot keep falling forever due to just one event.
On the 5-minute timeframe, two trading signals were formed on Friday. First, the pair consolidated below the 1.3175-1.3180 area just before the opening of the European trading session, and then, literally half an hour later, above it. The first signal turned out to be false, while the second allowed for a profit of about 30-35 pips.
On the hourly timeframe, the GBP/USD pair has left its sideways channel, but we doubt the decline will continue for long. Of course, if serious reasons arise for a new strengthening of the dollar, this scenario is possible. However, we do not see those reasons at this time. The conflict in the Middle East, if not completely resolved, remains on pause; the Federal Reserve has only indicated a possible rate hike by the end of the year; and the political crisis in the UK is a regular occurrence.
On Monday, novice traders can open short positions with targets of 1.3175-1.3180 if the price rebounds from the 1.3259-1.3267 area. A price consolidation above the 1.3259-1.3267 area will allow for long positions targeting 1.3319-1.3331.
On the 5-minute timeframe, trading can currently be done at the levels 1.3175-1.3180, 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3456-1.3476, 1.3587-1.3598, 1.3631-1.3641, 1.3695, 1.3741-1.3751. On Monday, there are no significant events planned in the UK or the U.S. Therefore, volatility today may be low unless geopolitics once again "explodes" the market.
Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.
Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.
The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.
Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.
Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.
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