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The British pound was slightly turbulent after it became known that Boris Johnson became the leader of the British Conservative Party and defeated Foreign Secretary Jeremy Hunt in the race for the post of British prime minister. Tomorrow he will go to Downing Street and replace Teresa May.
Given that such a scenario was very obvious and no one doubted his victory, the GBPUSD pair did not undergo significant changes. After a slight rise, traders began to sell the pound again, as they fear unexpected actions from the new leader of the Conservative Party.
All Johnson managed to say after appearing in the media was that it was necessary to reconcile the desire for self-government and the desire for close ties with the EU. He did not say any other details regarding the policy, as well as about Brexit. All he said was, "We know we're going to do this."
Most likely, more specific signals on how the political struggle within the Parliament will develop will be received tomorrow after the official assumption of the prime minister post and the first statement. Then Boris Johnson will begin to form his office.
As for the scenarios, which will follow the further development of the situation with Brexit, they are quite different, but everything has a place in life.
The first and the most problematic – Brexit without any agreement with the European Union – which will hit the economy and lead to serious economic and pathetic problems.
The second option is the most unlikely, which is to hold early general elections, and the third is the extension of the deadline for the UK to leave the EU.
All three scenarios imply the development of a full-scale political crisis in the UK, as there is still quite a lot of time to fight in Parliament with the new prime minister. Let me remind you that the official release date of the UK from the EU is October 31.
As for the technical picture of the British pound, it will remain unchanged until tomorrow, when Johnson's first performance will take place.
Most likely, the pressure on the pound will continue to persist, and sellers will strive for the lows around 1.2380 and for their renewal, which will resume the medium-term bearish trend and lead to annual lows of 1.2270 and 1.2160. If Johnson is soft enough in his first statements, then the upward correction that many traders are waiting for is not excluded. Demolition of stop orders above the resistance of 1.2500 and 1.2600 can set a good upward impulse for the pair.
EURUSD
The euro continues to fly down for a number of reasons, which have been mentioned quite a lot lately. Whoever does not know, then, most likely, the European Central Bank will announce fundamental changes in monetary policy on Thursday, and these changes are not good for the euro.
Today, another report was added by the International Monetary Fund report, in which it lowered its forecast for global GDP growth in 2019, pointing to a slowdown in international trade against the background of continuing tension in US-Chinese trade.
The IMF predicts global GDP growth at 3.2% in 2019, against 3.3%, which was indicated in the forecast for April. As for the growth of international trade, it will shrink and show an increase of only 2.5% in 2019, compared with the forecast of 3.4% in April.
From a technical point of view, the euro has big problems, as a breakthrough of such large levels as 1.1200 and 1.1160 will not bring anything good for risky assets in the future. The goal until Thursday are local lows in the 1.1120 and 1.1040 area.
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