18.10.201711:10 Forex Analysis & Reviews: The pound sterling and the euro can continue to decline

While the US dollar continues to receive support on the rising expectations of higher interest rates in the US, the British and European currencies are under pressure.

Once again, the appearance on the surface of the real problem of the amicable divorce of Great Britain and the EU was manifested on Tuesday in all its glory. The Organization for International Cooperation and Development (OECD) said that in order to stimulate the country's economy, it is necessary to cancel the results of the referendum in Britain, "as this will have a significant positive impact on the growth of the economy." They also echoed the head of the Bank of England, however, only with regard to the possible risks to the country's economy, which will be the basis for financial instability, as well as the reason for the cancellation of international contracts.

The OECD statement, as well as the comment by M. Carney, the Governor of the Central Bank of the UK, had a noticeable negative impact on the sterling, which fell due to growing doubts that the regulator will decide to raise interest rates at the November meeting, as it faces a difficult dilemma or restrains inflationary pressure, or to support by all means the economic growth. It seems that the second option will be chosen, which will undoubtedly cause a further depreciation of the British currency.

On Tuesday, the single European currency also fell under the distribution on the wave of data on consumer inflation, which showed its stabilization at 1.5% in annual terms, and its base component at 1.1%. Euro, though reluctantly, but turned down. Market participants seem to be still confident that the ECB will reduce the volume of government bond redemption, for example, by 30 billion euros from 60 billion euros a month, but it can keep the incentive program in effect for the entire year of 2018.

Observing the development of events, it can be assumed that the continuation of the above negative trends will have a negative impact on the euro and the British pound.

Forecast of the day:

The pair EUR/USD is trading below the level of 1.1780. If it does not rise above this level, we can expect the continuation of its decline to 1.1700.

The GBP/USD pair also has the potential to continue falling amid a drop in expectations for the rate hike by the Bank of England at the November meeting. Against this background, and also due to the unclear outcome of Brexit, the pair has every chance to resume the fall to 1.3030.