GBPUSD
Yesterday, there was another attempt to vote on Brexit, which was successful. The UK Parliament approved the Brexit agreement by 329 votes to 299, allowing Boris Johnson to implement his plan. However, the British pound has not risen, and there are several reasons for this.
After the vote, British Prime Minister Johnson said he was glad that the House of Commons approved the agreement, but disappointed that the House voted to delay Brexit. The UK Parliament rejected the government's proposal to speed up the passage of legislation on the Brexit agreement by 322 votes to 308. What follows from this? The postponement allows lawmakers to take a closer look at the current proposal and, if necessary, make changes to the bill that could completely bury the EU deal they agreed to. Thus, it seems that Johnson won, but so far it remains useless and meaningless.
However, for the pound and its medium-term upward outlook, this news is favorable, and after a small downward correction, or even keeping the pair in a narrow side channel, demand for the pound should return.
Now, it is necessary to wait for a decision from the EU. Boris Johnson has already asked for a shorter delay of 1-2 weeks, for Parliament to read the details of the agreement, but stressed that he is against a long delay until early 2020.
Also, the Prime Minister said that the government will pause in the legislation before the EU decision and will prepare for an exit without an agreement, which put pressure on the British pound in the short term yesterday.
As for the technical picture of the GBPUSD pair, further downward correction is not excluded. A break of 1.2840 support may increase the pressure on the trading instrument, which will lead to an update of the lows around 1.2750 and 1.2610. If the EU will make concessions to Johnson, which is unlikely, and agree to a shorter delay, it will give confidence to traders in the conclusion of the agreement and the UK's exit from the EU, which will strengthen the demand for the pound and lead to an update of the highs of 1.3020 and 1.3160.
EURUSD
The euro fell slightly against the US dollar on Brexit news, even despite weak fundamental data on the US economy.
According to a report by the National Association of Realtors, home sales in the United States fell in September this year due to high prices and low volume. Even despite lower interest rates, market problems persist, although some improvements in the sector have been noted.
Sales in the secondary housing market in September 2019 decreased by 2.2% and amounted to 5.38 million homes a year. Economists had expected sales to fall by 0.7%. Compared to the same period the previous year, sales in September increased by 3.9%. The average mortgage rate at the end of September was 3.64% compared to 4% six months earlier.
Manufacturing activity in the area of responsibility of the Federal Reserve Bank of Richmond increased due to increased supplies and new orders. According to the data, the Fed-Richmond composite manufacturing index in October 2019 rose to 8 points against a negative value of -9 points in September. Economists had expected the indicator to be -6 points in October.
According to Redbook, retail sales decreased in the first 2 weeks of October but increased compared to last week. The report indicated that US retail sales for the first 2 weeks of October fell by 0.1%, while compared to the same period in 2018, it increased by 4.2%. For the week of October 13-19, sales in the annual period increased by 4.3%.
According to the Retail Economist and Goldman Sachs, the US retail sales index for the week of October 13-19 rose by 3.1% and 2.7% compared to the same period in 2018.
However, all attention is now focused on tomorrow's meeting of the European regulator. The European Central Bank may resort to monetary easing. Tomorrow will be the last meeting of the European Central Bank with Mario Draghi at the head. It is expected that Draghi will "slam the door" and go for another reduction in deposit rates, or at least make direct hints at such measures, which can be implemented in December. In the case of this approach, it is not quite right to expect purchases of risky assets after the Brexit decision.
From a technical point of view, the bears will continue to put pressure on the euro, and the breakthrough of the support of 1.1115 will lead to a further downward correction of the trading instrument in the area of the lows of 1.1090 and 1.1050.
