The British pound partially recovered its losses against the US dollar after news of the suspension of the British Parliament, which was requested by British Prime Minister Boris Johnson to Queen Elizabeth II. By the end of the North American session, it became known that the Queen of Great Britain approved the suspension of the Parliament. However, for all the anxiety of the problem, Johnson's strategy can give investors the clarity they have long craved. We are talking about the final decision of the UK's exit from the EU on October 31, without further postponement, whether the exit with the conclusion of the deal or without it.
Parliament will stop work on September 10 and resume it only in mid-October this year. Let me remind you that the suspension of the Parliament is connected with the limitation of the period during which British lawmakers will be able to block the hard Brexit scenario. Yesterday, the opposition has already spoken about this, which was extremely dissatisfied with this development of the situation.
Some experts see pluses in such measures, since during the suspension of parliament, the EU leadership may allow important amendments to the Brexit agreement to be supported by British parliamentarians, who are hoping to avoid a disordered exit of the UK from the trade and political bloc.
As for the technical picture of the GBPUSD pair, much will depend on the further actions of Boris Johnson, as a few days ago traders were full of enthusiasm and bought the pound, and yesterday they got rid of it chaotically. Such volatility hinders the market and emerging trends. Bears will try to secure a breakthrough of the support of 1.2195, which will push the trading instrument even lower, to the areas of 1.2150 and 1.2080. Buyers of the pound need to find strength and still try to catch hold of the resistance of 1.2250, which yesterday did not succeed. Only this will provide the bulls with new upward momentum to the maximum area of 1.2300.
EURUSD
As for the EURUSD pair, yesterday's speeches of the Fed representatives did not have much impact on the market. Federal Reserve Bank of Richmond President Tom Barkin said the US economy looks strong, but noted increased uncertainty, especially in US foreign trade. Barkin also noted that the Fed is closely monitoring the consequences of lowering interest rates on July 31, but there is no talk of further changes in monetary policy.
San Francisco Fed President Mary Daly also believes that the Central Bank should be inclined to pursue interest rate policies that will promote employment growth, which will also benefit inflationary pressures in the economy, which are now quite weak. The Fed representative also believes that keeping interested rates too low can cause instability, but there are no signs of big bubbles at the moment.
According to US government bond futures, investors estimate a 95% probability of a quarter percentage point rate cut at the next Fed meeting on September 18. The probability that rates will be reduced by half a percentage point at once is estimated at 5%.
Yesterday, there was positive news that the political parties of Italy have agreed to form a new government, but this did not affect the quotes of the EURUSD pair, which continued to trade around the level of 1.1085. A new agreement between the "Five Star Movement" and the Democratic Party of Italy will allow refusing early elections.
As for the technical picture of the EURUSD pair, it remained unchanged and the further direction will be directly the envy of several fundamental data that will be released today on the economy of the eurozone and the United States. Bulls will need a lot of effort to return to the resistance of 1.1120 and break above this range, as only after that it will be possible to talk again about the continuation of the growth of the euro to a maximum of 1.1160. A break of the support of 1.1080 will provide the bears with new forces that will push the trading tool already in the area of the August lows to the level of 1.1050.
