19.08.201909:11 Forex Analysis & Reviews: Forecast for EUR/USD and GBP/USD on August 19th. What we expected from Boris Johnson and what we waited for

EUR/USD – 4H.

As seen on the 4-hour chart, the EUR/USD pair has completed the closing under the correction level of 100.0% (1.1107). Thus, on August 19, the fall of quotations can be continued in the direction of the next correction level of 127.2% (1.1025). Friday, August 16, was quite boring, but in America, there was one interesting indicator – the consumer confidence index from the University of Michigan – which fell from 98.4 to 97.2. This index reflects the economic sentiment of the population, which is expressed through the desire to buy and save. Accordingly, the fall of the index indicates that the population is beginning to worry about the future and is more inclined to savings. However, since November 2014, this index has dropped below the level of 90.0 several times, so it is too early to sound the alarm. But anyway, the demand for the US dollar fell in the US trading session on Friday.

Today, we are also interested in one report. We are talking about the consumer price index in the eurozone, which will be released at 10:00 London time. What to expect from inflation in the EU? Hardly anything good. What are the reasons to assume the acceleration of inflation? There are some – in Germany, inflation accelerated to 1.7% in July, but, for example, in France – decreased to 1.1%, in Italy – decreased to 0.4% y/y, in Spain – "accelerated" to 0.5%. Thus, European inflation is unlikely to exceed the forecast of 1.1% y/y. But even if it exceeds, it is unlikely to cause a strong rise in the euro. The correction level of 100.0% (1.1107) is the ceiling for the euro/dollar pair. Until this ceiling is broken, count on going up is not necessary. Closing the pair above the Fibo level of 100.0% will work in favor of the EU currency and some growth in the direction of the correction level of 76.4% (1.1180).

The Fibo grid is built on the extremes of May 23, 2019, and June 25, 2019.

Forecast for EUR/USD and trading recommendations:

The EUR/USD pair has completed the closing under the correction level of 100.0% (1.1107). I recommend selling the euro/dollar pair with the target of 1.1025, with the stop-loss order above the level of 1.1107.

I recommend buying the EUR/USD pair with a target of 1.1180, and with a stop-loss level of 1.1107, if the closing is performed above the correction level of 100.0%.

GBP/USD – 4H.

The pound is creeping in the direction of the correctional level of 127.2% (1.2180) as part of the recovery after a protracted decline. The rebound of quotations of the pair pound/dollar from the Fibo level of 127.2% will allow traders to expect a reversal in favor of the US dollar and the resumption of the fall in the direction of the correctional level of 161.8% (1.1853). Does it only remain to know when this fall is worth the wait? After all, in fundamental terms in the UK, nothing changes for the better, and the pound sterling still feels like a powder keg.

I would like to draw traders' attention to an important question: what was expected of Boris Johnson when they elected him as the Prime Ministers. I believe that it was precisely the wrong expectations from Johnson's politics that led the British political sphere to where it is now. Johnson wanted Brexit to be implemented, but also hoped for a miracle. That Johnson will somehow be able to negotiate with the European Union, that the European Union will somehow want to conduct new negotiations with London, that the European Commission and the European Parliament will voluntarily abandon the "backstop". But the miracle, of course, did not happen, and Johnson is still extreme, although by and large, he has no other option but to implement Brexit "No deal". Now, almost half of the Parliament is against him, as no one wants to leave the EU without a deal. What would change if Jeremy Corbyn came to power? Will he negotiate with the EU? Unlikely? Implements Brexit "No Deal"? Johnson can do that, too. Delay Britain's exit from the EU? What is the point if there are no new negotiations on the deal with Brussels? In general, the British government circles finally confused and do not know what to do with Brexit. The pound sterling will react very sharply to new shifts in the Parliament, to new showdowns in the Parliament, to the vote of confidence in Johnson. Traders need specific signals to improve the state of the UK economy, the prospect of improving this state at worst, the light at the end of the tunnel called "Brexit". None of this is happening right now.

The Fibo grid is built on the extremes of January 3, 2019, and March 13, 2019.

Forecast for GBP/USD and trading recommendations:

The GBP/USD pair may resume the process of falling. Thus, I recommend selling the pair with the target of 1.1853, with the stop-loss order above the level of 1.2180, if the rebound from the Fibo level of 127.2% is executed.

I recommend buying the pair with the target of 1.2437 and with the stop-loss order below the level of 127.2% if the closure is performed above the level of 1.2180.