24.07.201909:36 Forex Analysis & Reviews: GBP and EUR: What path will Boris Johnson take in his new position as Prime Minister of the United Kingdom. The US and China return to negotiations

The pound took a break before an important political event, which is that today Boris Johnson will take the post of Prime Minister of the United Kingdom, after which general early elections will be appointed.

The statements that will be made by the new Prime Minister are likely to be decisive for the further direction of the British pound, as the GBPUSD pair is already balancing around the annual lows, the breakthrough of which will only aggravate the situation.

Johnson can signal the scenario of hard and uncompromising Brexit. Then bring it to the end, and at the end of the year, under pressure, will resign. According to the polls, the probability of general elections is about 60%, while the probability of the behavior of the second referendum on UK membership in the EU until the end of 2020 is about 9.0%. I spoke in more detail about the possible scenarios for the development of the situation in the UK in yesterday's review.

If Johnson seriously talks about the scenario of a chaotic UK exit from the EU, which will have a negative pressure on the British economy, the pound will continue its decline. The breakthrough of the year's low in the area of 1.2380 will lead to the demolition of a number of stop orders of large buyers and will cause another wave of the bearish market with a high probability of the pair's decline to the area of the lows of 2017 and 2016. Large support levels in this scenario will be seen at 1.2260 and 1.2120.

Whether Boris Johnson will take into account in his decisions the economic problems of the UK and the fact that recent fundamental data showed a slowdown in economic growth is not yet clear. If so, the tone of his speeches can be much softer than traders expect.

There is also the possibility of a longer-term of office for the new Prime Minister and less active opposition to him within Parliament. To do this, Johnson needs only a little change in their views on the situation with Brexit and more loyal to the situation. However, as in this case, he will be able to solve the problem with which Theresa May could not understand for 2 years, it is unclear.

After today's statements, it will be clear exactly what to do. Either to lay the markets on a hard Brexit, or on the long-term preservation of the deadlock and further. Neither pound does not promise anything good.

EURUSD

The euro continued to lose ground before a key meeting of the European Central Bank.

Yesterday's data on the US were completely ignored by the markets, although they pointed to the weakness of the US economy. According to data, sales in the US secondary housing market in June declined due to high prices and limited stocks of real estate.

The report of the National Association of Realtors indicates that sales in the secondary housing market in June 2019 decreased by 1.7% compared to the previous month and amounted to 5.27 million homes per year. Economists had expected sales to fall only 0.6 percent. Compared to the same period of the previous year, sales decreased by 2.2%.

Business activity in the manufacturing sector in the area of responsibility of the Federal Reserve Bank of Richmond in July also fell. The decline was due to a weak supply index and new orders index. According to the Fed-Richmond, the composite manufacturing index in July this year fell immediately to -12 points against 2 points in June. Economists had expected the index to be 9 points in July.

Yesterday's statements of economic adviser to the US President Kudlow supported the US dollar. It became known about the resumption of negotiations. Representatives of the US and China are expected to meet in China soon. Basically, the issues of the purchase of agricultural products in the US by the Chinese side will be considered.

As for the technical picture of the EURUSD pair, the prospects for risky assets, before tomorrow's ECB meeting, remain quite gloomy. The bears have reached the support of 1.1160 and stood below. Now, their new goal will be to break the low of 1.1135, which will only increase the pressure on the trading instrument and push it to the next lows in the area of 1.1110 and 1.1080.