The British pound yesterday ignored the news that the general election in the UK will still be held on December 12 this year, as Boris Johnson wanted. Yesterday, parliamentarians voted in favor of such a decision to finally resolve the impasse that is now observed on the Brexit issue. It is expected that the current vote will be the most unpredictable in recent times, as the leader of the conservative party, Boris Johnson, has a minimal advantage over the leader of the Labor Party, Jeremy Corbyn.
Let me remind you that the Prime Minister of Great Britain managed to push his fourth bid for the elections in the ratio of 438 votes in "favor", 20 – against. The first attempts were blocked in parliament and did not find the support of the majority.
The head of the Labor Party has already stated that he supported the election, and did so to transform the country. The Liberal Democratic Party and the Scottish National Party abstained from voting after their proposal to hold elections on December 9 was rejected.
It is noteworthy that almost half of all members of the parliament from the Labor Party were absent or voted against the law in the sign of dissatisfaction with the early elections. Parliament will be dissolved on Wednesday for a five-week campaign, provided the House of Lords passes Johnson's law.
Boris Johnson's main adversary, Jeremy Corbyn, has already called on his constituents to vote for him and oust Johnson along with the conservatives. Liberal Democrat leader Jo Swinson turned to his voters, saying that now is the best chance to elect a government that can stop Brexit.
In general, as you can see, we expect a hot five weeks in the struggle for the government seat. Against this background, the pound's volatility, although it will continue, is unlikely to be the same as in the past few weeks. The pair will likely decline, but for this, the bears need to break below the support of 1.2800, which will increase the pressure on the trading instrument and lead to larger supports in the area of 1.2730 and 1.2660. If the demand for the pound continues, and such a scenario is also possible today, as the Federal Reserve may lower interest rates, the growth will be limited to this month's highs around 1.3015. However, before this, buyers need to break above the resistance of 1.2945.
EURUSD
Yesterday's weak data on the US economy put pressure on the US dollar.
According to the report, American consumer confidence declined in October this year. The decline has been observed for the third month in a row, which indicates the persistence of uncertainty among consumers amid a slowdown in the global economy, which harms American prospects.
According to the Conference Board research group, the consumer confidence index fell to 125.5 points in October from 126.3 points in September, while economists had expected the index to rise to 128 points in October. The current conditions index rose to 172.3 in October, while the expectations index fell to 94.9 points.
The Conference Board noted that along with general factors, consumer confidence and concerns about employment prospects weakened.
The report on the number of home sales contracts in the US was ignored by the market. According to the National Association of Realtors, the index of signed home sales contracts in September this year rose to 108.7 points, or 1.5%, while economists predicted that in September the index would grow by 0.7%. Compared to the same period of the previous year, sales rose by 3.9% in September.
As for the technical picture of the EURUSD pair, all attention will be focused on the US GDP report and the decision of the US Federal Reserve on interest rates. Many economists expect the rate to be lowered to 1.75%, while there is the talk of a "technical pause" in lowering rates that the committee may take before the final December meeting this year. Most likely, this scenario will support the US dollar. Therefore, another unsuccessful attempt to get beyond the resistance of 1.1120 will increase the pressure on the pair, and a good report on US GDP growth will return buyers of the American dollar capable of breaking through the support of 1.1075. Below this range, stop orders of the bulls will work, which will bring the trading instrument to a minimum of 1.1050 and 1.1020.
If the Fed decides to lower interest rates, it is unlikely that it will be possible to count on a strong bullish impulse of risky assets, since such a decision has already been partially taken into account by the markets. Limit the growth of EURUSD highs in the area of 1.1150 and 1.1180.
