Forecast for EUR/USD and GBP/USD on August 8th. The vote of confidence in Boris Johnson could be announced as early as September
EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair, although it moves quite actively, unlike the GBP/USD pair, still the main attention of the forex market is now focused on the UK, and accordingly to the pound sterling. In the European Union, no interesting economic reports in recent days did not come out, and in America, the main newsmaker is President Donald Trump, whose repertoire has recently become scarce. Trump’s statements are now associated with criticism of the Fed. First, Trump was dissatisfied with the sharp and too rapid increase in the key rate, then – that the Fed does not want to reduce it, now – that reduces too slowly and does not want to admit their mistakes. “Our problem is not China, our economy is strong, money is flowing to us, while China is losing companies and the yuan is under siege. Our problem is the Fed, too proud to admit its mistakes on too rapid monetary tightening.” I wonder if Trump means that the Fed should apologize to him or just start to lower the rate faster? Anyway, criticism of the Fed and Jerome Powell continues, and the euro/dollar, meanwhile, has complied with the rebound from the correction level of 61.8% (1.1224) that allows traders to expect some decline towards the levels of 76.4% (1.1180) and 100.0% (1.1107).
The Fibo grid is built on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
The EUR/USD pair performed the rebound from the correction level of 61.8% (1.1224). I recommend buying EUR/USD with the targets of 1.1260 and 1.1296, with stop-loss order below the level of 1.1224, if the level of 61.8% is overcome. I recommend selling the pair with targets of 1.1180 and 1.1107, and with a stop-loss order above the level of 1.1224, since a rebound from the correction level of 61.8% has been completed.
GBP/USD – 4H.
The pound/dollar pair seems to have taken a break and is waiting for the development of events, reports of which come from the UK in batches. The whole world is closely watching the British Parliament and the confrontation between Prime Minister Boris Johnson and opposition forces. In short, the essence of the disagreement lies in Brexit. Johnson wants in any case, according to any scenario, to withdraw Britain from the European Union on October 31. The European Union has abandoned negotiations on a new agreement on Brexit, so there is nothing for the newly minted Prime Minister. However, the idea of a hard Brexit is supported a little in the British government. The Laborites from the very beginning of Johnson’s reign stated that they would not support such an option for Brexit, but they supported the second referendum, during which the people would be given the opportunity to decide the fate of Great Britain. Now, Labor is in favor of blocking Brexit with “No Deal”, as they consider it the worst possible option, or even simply unacceptable. And Boris Johnson can be given a vote of confidence. It is unlikely that Johnson will agree to voluntarily leave the Prime Minister’s office just a few months after winning the election. However, the opposition forces can unite in a fairly large political bloc, which will not be able to resist Johnson and his party members. In any case, the UK begins a new round of political warriors. Technically, the GBP/USD pair continues to trade under the Fibo level of 127.2% (1.2180), which keeps the chances of the pair to resume falling in the direction of the correction level of 161.8% (1.1853).
The Fibo grid is built on the extremes of January 3, 2019, and March 13, 2019.
GBP/USD – 1H.
As seen on the hourly chart, the pound/dollar pair continues to trade strictly between the correction levels of 200.0% (1.2227) and 261.8% (1.2057). Bearish divergence formed by the CCI indicator increases the chances of the pair to fall in the direction of the correction level of 261.8%. The data from the 4-hour chart, on which the key is the rebound from the Fibo level of 127.2%, is still more important.
The Fibo grid is based on the extremes of June 18, 2019, and June 25, 2019.
Forecast for GBP/USD and trading recommendations:
The GBP/USD pair may resume the process of falling. Thus, I recommend selling the pair with the target of 1.2057, with the stop-loss order above the level of the bearish divergence peak. I recommend buying the pair with the target of 1.2334 and with the stop-loss order below the level of 200.0% (hourly chart), if the closing is performed above the level of 1.2180.
The material has been provided by InstaForex Company – www.instaforex.com