17.07.201900:42 Forex Analysis & Reviews: EUR and GBP: Euro and pound failed even amid good reports, which indicates a large downward potential

The euro continued its downward movement, despite the fact that exports of goods from the eurozone increased in May this year, while imports declined.

EURUSD

Many analysts have already started talking about the fact that the eurozone economy has stood firm against the background of a sharp deterioration in trade relations and a slowdown in overall world economic growth, but there was hardly a single growth in May, following a landslide in April, is a sure signal to avoid a recession.

According to the statistics agency, the eurozone foreign trade surplus in May 2019 rose to 20.2 billion euros from 15.7 billion euros in April. Exports showed growth in May by 1.4% compared with April, while imports declined immediately by 1.0%.

I recall that in April of this year there was a sharp decline in exports, which was caused by weak external demand. Without taking into account the correction for seasonal factors, the positive balance of foreign trade in the eurozone rose to 23.0 billion euros in May from 16.9 the previous year.

Let me remind you that recently the ECB leaders have again started talking about the introduction of additional measures to stimulate the economy in order to support its growth. They signaled their willingness to lower interest rates or resume the asset purchase program if necessary.

In the first half of the day, a report was also issued by the ZEW Institute, in which it stated that the current conditions index in Germany in July of this year dropped sharply to -1.1 points against 7.8 points in June. Such a serious fall in the index is directly related to the latest data indicating the problems of growth in the German economy.

The index of economic expectations in Germany fell even more and amounted to -24.5 points in July against -21.1 points in June. Economists had expected the ZEW index of economic expectations in Germany for July 2019 to be -22.5 points.

In the euro area as a whole, sentiment also deteriorated. According to the data of the same ZEW institute, the sentiment index in the business environment of the eurozone in July dropped to -20.3 points against -20.2 in June of this year.

As for the technical picture of EURUSD, the downward movement in the trading instrument was not unexpected. The breakthrough of support and going beyond the channel of 1.1240 increased the pressure on the trading instrument, which led to the update of a larger level in the area of 1.1200. The next target of risky asset sellers is a low of this month - 1.1160.

GBPUSD

The British pound continued to fall against the US dollar, completely ignoring a good report on wage growth in the UK and unemployment.

According to the National Bureau of Statistics, in the period from March to May of this year, the average salary in the UK rose by 3.6% at once, which in the future will necessarily affect the increase in retail sales and citizens' spending for the better. Unemployment in the UK during the reporting period remained at 3.8%.

However, despite this, the prospects for the country's economy are overshadowed by the unclear situation with Brexit, since, apparently, the new receiver of Theresa May's post will be Boris Johnson, who is a supporter of a hard scenario.