The GBP/USD currency pair once again traded rather sluggishly on Tuesday. In the morning, the UK released unemployment and wage data, but the figures were far too "bland." Essentially, only the report on the change in the number of unemployed differed from the forecast. The market expected an increase of 15,000, but in reality, the number of unemployed fell by 6,000. This is undoubtedly positive, but not significant enough to expect a strong market reaction.
In our view, the market is entirely focused on one event — the talks between Vladimir Putin and Donald Trump on Friday in Alaska. The outcome will decide the fate of the military conflict in Ukraine. Moreover, it seems that Ukrainian President Volodymyr Zelensky is not going to be invited at all. What could this indicate? That Ukraine will be presented with a fait accompli?
Either way, the world wants the war to end. Perhaps not the world as a whole, because there will always be countries that benefit from a war, as long as it is not fought on their territory. Therefore, much depends on the Friday negotiations. Suppose Trump and Putin agree on a ceasefire between Ukraine and Russia (a phrase that already sounds somewhat strange). What would that mean for the markets? That most sanctions on Russia would be lifted. Cooperation between America and Russia could expand and strengthen, potentially leading to a period of friendly relations between the U.S. and Russia.
For Ukraine, any ceasefire would mean it stops losing its own territory, but the final agreement would likely be highly disadvantageous to it. Will Kyiv agree to sign a deal that is essentially being discussed without it? That remains an open question, and we doubt that Volodymyr Zelensky would readily sign any agreement handed to him by Trump.
However, it is worth remembering that Trump has already concluded a super-profitable agreement with the European Union, which had far more leverage than Ukraine does. Trump is generally a master at making deals that benefit him rather than his opponent. It should also be recalled that the U.S. has the strongest lever of pressure on Kyiv — financial and military aid. If Kyiv refuses to accept the terms of the deal, that aid could be cut off, and Ukraine could begin losing territory much faster than it is now.
In essence, Kyiv's choice comes down to this: either agree to the deal reached by the U.S. and Russian leaders, or continue losing people and territory and be left without most of the support in this conflict. We believe that this is indeed a moment when the conflict could realistically be ended. The beneficiaries of a ceasefire could be any currencies and assets except the dollar. Recall that the dollar remains a "safe haven" — meaning demand for it rises when geopolitical tensions escalate. A de-escalation of the military conflict would increase demand for risk assets and currencies, boosting investment flows into developing economies.
The average volatility of GBP/USD over the past five trading days is 82 pips. For the pound/dollar pair, this is considered "moderate." Therefore, on Wednesday, August 13, we expect movement within the range limited by the levels of 1.3427 and 1.3591. The long-term linear regression channel is pointing upward, indicating a clear upward trend. The CCI indicator has entered the oversold area twice, warning of a possible resumption of the uptrend. Several bullish divergences have also formed.
Nearest Support Levels:
S1 – 1.3489
S2 – 1.3428
S3 – 1.3367
Nearest Resistance Levels:
R1 – 1.3550
R2 – 1.3611
R3 – 1.3672
Trading Recommendations:
The GBP/USD currency pair has completed another round of downward correction. In the medium term, Trump's policies will likely continue to put pressure on the dollar. Therefore, long positions with targets at 1.3550 and 1.3591 remain much more relevant when the price is above the moving average. If the price is below the moving average, small shorts can be considered with targets at 1.3367 and 1.3306 on purely technical grounds. From time to time, the U.S. currency shows corrective movements, but for a trend-based strengthening, it would need real signs of the end of the global trade war — something that now appears unlikely.
Explanation of Illustrations:
Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.
Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.
Murray Levels act as target levels for movements and corrections.
Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.
CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.
