18.12.201816:42 Forex Analysis & Reviews: Brexit and the euro: Theresa May makes an interesting move. The US dollar continues to weaken before tomorrow's Fed decision

The euro continues to rise against the US dollar, as many traders close their positions before the Federal Reserve decision on interest rates tomorrow. On the one hand, the probability of raising the rate to 2.5% is very high. But on the other hand, how the Fed will behave next year remains a mystery. .

Donald Trump's recent statements about the inadmissibility of raising interest rates, as well as a weak report on industrial production and inflation indicate that Fed economists may not see the results on GDP growth in the 4th quarter of this year, which they are counting on.

Eurozone

In the meantime, the weak data that has arrived today on the German economy was ignored by traders. However, the European currency, which is currently growing, is not so much strong as the American dollar shows weakness amid talk of an impending recession and a financial crisis.

According to the report of the Institute Ifo, the index of business sentiment in Germany in December of this year fell more than economists had expected. This indicates that the largest European economy will continue its weak growth against the backdrop of tensions in trade relations.

Despite the leading nature of the data, the German business sentiment index on Tuesday dropped to 101 points against 102 points in November, while economists expected the index to be 101.6 points in December. Ifo noted that concern is growing in a number of German companies. Many of them noted the deterioration of the business environment.

The decrease in the Ifo index also confirms that the growth of the German economy is slowing.

As for the technical picture of the EUR/USD pair, a fixation above the upper border of the side channel of 1.1385 will indicate a further likelihood of European currency growth to highs in areas 1.1420 and 1.1450. However, one should not forget that tomorrow the decision of the Fed on interest rates will be published, which can drastically affect the market situation. Failing to fix above resistance 1.1385 could cool down the buyers of risky assets, which will lead to a correction in the trading instrument to the support area 1.1360 and 1.1315.

Great Britain

The significant weakness of the American dollar is also indicated by the growth of the British pound, which seemingly due to major political differences cannot strengthen its position.

It has become known that the leader of the Labor Party of Great Britain, Jeremy Corbyn, may offer to submit a vote of no-confidence to Prime Minister Theresa May, as it was recently in the Conservative Party.

Such a proposal may come from the fact that yesterday, Theresa May refused to bring the Brexit agreement to a vote in parliament before the Christmas holidays. This suggests that May intends to schedule a vote on the agreement for the week starting on January 14, which leaves even less time to work out and change the current Brexit agreement, which does not suit the British Parliament. From another point of view, the Prime Minister of Great Britain will leave even less time for parliament to reflect on such a maneuver, as there will be nothing at all until March 2019.

As for the technical picture in the GBP/USD pair, apparently, the demand for the pound is unlikely to be supported above the large resistance of 1.2690, which limits the upward correction. An unsuccessful consolidation above this range may lead to the closure of a number of long positions and the demolition of buyers' stop orders, which will return the GBP/USD pair to the lows of the day in the 1.2610 area.