The British pound continues to gradually decline against the US dollar after news that the EU will postpone its decision related to the duration of the next Brexit extension until Monday or Tuesday. This was stated today by EU negotiator Michel Barnier, speaking at a meeting in Brussels. This was done to take into account the results of the vote, which will be held today at the request of the Prime Minister of Great Britain Boris Johnson on the holding of general elections. According to sources, the bloc's proposal will be made on Monday or Tuesday – just 48 hours before the UK is set to leave the EU on October 31.
Such news is a "headache" for the head of the Labor Party, Jeremy Corbyn, as, judging by his recent statements, the Labor Party was ready to vote for the general election only after the EU grants a delay to the UK to leave until January 31, 2020. As a result of such manipulations, Johnson's election proposal will once again fail.
However, traders are in no hurry to get rid of the pound. There is talk that most EU member states want to accept the terms of the extension, under which Brexit could be delayed until January 31, 2020, with the possibility of an earlier exit if the withdrawal agreement is approved by the House of Commons and the European Parliament.
As for the technical picture of GBPUSD, it remained unchanged. An unsuccessful attempt to return the bulls of the resistance of 1.2860 may lead to the formation of another downward wave in the trading instrument with the update of the lows 1.2760 and 1.2600. If the bulls can overcome the level of 1.2860 today, we can expect purchases and updates of the resistance of 1.2950.
EURUSD
Buyers of the European currency failed to break above the important resistance of 1.1120 after the release of weak fundamental data indicating a decline in consumer confidence in Germany amid the growth in the number of layoffs. According to research group GfK, the leading index of consumer confidence in Germany in November 2019 was 9.6 points against 9.8 points in October. Economists had expected the November index to be 9.8 points. As noted above, particular pressure on the index was exerted by the increase in the number of layoffs in the automotive industry. The economic outlook indicator fell to -13.8 points in October from -9.0 points in September.
The German business sentiment index remained unchanged in October, which also indicates the problems faced by businesses. However, the expectations of companies have become more positive. According to the Ifo Institute, the index of sentiment in the German business community in October 2019 amounted to 94.6 points, remaining unchanged compared to September. Economists had forecast a decline to 94.5 points. The expectation index rose to 91.5 points in October from 90.9 points in September.
Today, an interesting report was also published from analysts at the European Central Bank, which lowered forecasts of GDP and eurozone inflation by the end of 2021. It is expected that real GDP growth in the eurozone in 2019 will be at the level of 1.1%, and in 2020 it will drop to 1%. Growth will resume only by the end of 2021 at 1.3%. As for inflation, its analysts forecast at 1.2% in 2019 and 1.2% in 2020. Growth will begin only by 2021 at 1.4%. In the longer term, inflation will not reach the target level of about 2.0% and amount to 1.7%.
This all suggests that the ECB will continue to adhere to measures of soft monetary policy, which will limit the growth of the euro in the long term.
As for the technical picture of the EURUSD pair, the bulls need a return of the resistance of 1.1120, as only after that it will be possible to count on a larger upward trend in the area of this month's highs of 1.1180. The probability of maintaining pressure on the euro is also present, but much will depend on the development of the situation around Brexit.