18.09.201900:42 Forex Analysis & Reviews: EURUSD and GBPUSD: Investor sentiment has slightly improved, but prospects remain negative. Traders are waiting for the decision of the Supreme Court of Great Britain

The euro is trying to regain its position against the US dollar after a series of reports from the ZEW Science Center on economic expectations and conditions. Despite the eurozone economy slipping into a recession, the index of economic expectations in Germany according to the scientific center, in September rose by 21.6 points, to -22.5 points. Economists had expected the indicator to be -37.9 points in September.

The report indicated that, despite slight growth, further prospects remain negative, which is directly related to fears of an intensification of the trade conflict between the US and China. In addition, such concerns are now also associated with a possible trade conflict with the EU, which should negatively affect the index in the future. There is only some hope that Brexit can be avoided without an agreement, which slightly reassures investors. But the index for assessing the current situation in Germany fell even further, to -19.9 points from -13.5 points in August.

A similar sentiment index in the business environment of the eurozone from the ZEW Institute also slightly firmed, but remained in the negative zone. The report states that business confidence increased in September to -22.4 points from 43.6 points in August this year. I already mentioned the reasons why the index remains in negative territory.

Against the background of the absence of other important fundamental statistics, the EURUSD pair remained in the side channel, however, the market switched to the side of buyers of risky assets. From a technical point of view, the bulls still need to return to the resistance level of 1.1035, since only under this condition can we expect a larger upward trend of the euro to the highs of the previous week 1.1070 and 1.1110.

Talking about lowering interest rates by the Federal Reserve tomorrow will also put some pressure on the US dollar and support the demand for risky assets. Nobody doubts that tomorrow the Fed leaders will decide on monetary policy in the direction of lowering interest rates. This will be done in order to ensure sufficient economic growth. Market participants will also closely monitor how Powell will characterize the prospects for further rate cuts by the end of this year.

At the moment, not counting tomorrow's decline, another one is forecasted in December. According to CME Group, investors estimate the likelihood of another rate cut this year at 58%, while in August this figure was at 93%. Let me remind you that at the July 31 meeting, the key rate was lowered by a quarter of a percentage point, to the range of 2% -2.25%.

The British pound is full after yesterday's meeting of the British Prime Minister and EU representatives, which ended unsuccessfully. The only thing that can support the pound now is the news that the British Supreme Court is examining the legal basis for Prime Minister Boris Johnson's decision to suspend Parliament. If the decision leads to the cancellation of the suspension of work, it is quite possible that the pound will resume its growth against a number of world currencies. However, it is unlikely that the court will take such measures in the face of political tension and the approaching term for Brexit.