18.06.202008:36 Forex Analysis & Reviews: Trading plan for EUR/USD and GBP/USD on 06/18/2020

Yesterday, Ursula von der Leyen made a very serious request to be recognized as the most amazing woman of the year. The head of the European Commission somewhat specified the concessions that the European Union is ready to make in the matter of a trade agreement with Great Britain. But at the same time, she managed to raise even more questions. What struck me most was that the European Union was supposedly ready to make some concessions on such a fundamental issue as the regulation of fishing. However, she did not specify what exactly these concessions might be. Even the European Union seems to be ready to make some concessions there on such a minor and uninteresting issue as the role of the European Commission in working out trade and economic decisions. Of course, in the absence of specifics regarding fishing, all these powers do not play any role whatsoever. The possibility of Hungarian fishermen to fish off the coast of Scotland is concerning. This is just an existential question. In short, the question remains unanswered and the market stood still in anticipation.

On the other hand, the markets had nothing to rely on. Yes, inflation in the UK fell from 0.8% to 0.5%, but there was nothing new in this information. Everyone knew about this since the publication of preliminary data. So the sad fact of lower inflation in the United Kingdom has long been included in the pound's value.

Inflation (UK):

The situation with the common European currency is similar, since inflation in Europe has declined from 0.3% to 0.1%, since the publication of the preliminary estimate, has already been included in the value of the pan-European currency. Well, construction, the volume of which decreased by another 28.4%, has never had a special impact on the markets. Although the data came out slightly better than forecasts, as they expected a decline of 34.2%.

Scope of construction (Europe):

The American construction industry is a little more important, and in fairness, it should be noted that the market shows a kind of revival at the time of publication of the data. Moreover, the data indicate some signs of recovery of the industry. In particular, the volume of construction of new houses rose by 4.3, which is particularly from 934 thousand to 974 thousand. However, the volume of construction has almost halved after three months, such growth, of course, can somehow change the overall picture of the world. Another thing is that the number of issued building permits increased by 14.4%, that is, from 1,066 thousand to 1,220 thousand, which means that construction can continue to grow. The fact of growth in the current conditions is certainly an extremely positive factor.

Number of Building Permits Issued (United States):

It is possible that the results of today's board meeting of the Bank of England will be taken out of shock. And we are not talking about expanding the program of quantitative easing, for which everyone has long been ready. In fact, after the European Central Bank took such a step, the Bank of England has simply no choice but to increase the volume of the program from 645 billion pounds to 745 billion pounds. What matters is what can happen with the refinancing rate, but this will not be touched today. Recently, there has been increasing rumors that the Bank of England still has a space for action, since its refinancing rate is not zero. That is, there is still much to reduce. Given the heaviness of the recession in the UK, the probability of lowering the refinancing rate is clearly different from zero. So if the Bank of England at least hints at the possibility of lowering the refinancing rate today, the pound is clearly not going to be too good. However, the fact of expanding the program of quantitative easing does not add optimism either.

Refinancing Rate (UK):

The meeting of the Board of the Bank of England is not only limited to the list of events today. After all, today is Thursday, and this is the day of publication of data on applications for unemployment benefits and forecasts for them are moderately optimistic. In general, for US statistics, this is already starting to take the form of a steady trend. So, the number of initial applications may decline from 1,542 thousand to 1,150 thousand. The number of repeated applications should decline from 20,929 thousand to 20,000 thousand. Yes, the values are still prohibitive, but the tendency is to gradually decline the number of applications, which is clearly an encouraging factor.

Repeated Unemployment Claims (United States):

The euro/dollar currency pair continues to concentrate in the region of 1.1210/1.1250, where traders find periodic support on a systematic basis. It can be assumed that the concentration of trading forces in this area will not last long, where, in case the price is consolidated below 1.1200, the way will open for us in the direction of 1.1180-1.1150. Otherwise, a regular rebound from this area awaits us, as it happened in the period earlier.

The pound/dollar currency pair in the phase of the correction course from the level of 1.2770 found a point of variable support within the area of 1.2500, where it slowed down and formed an accumulation in the range of 1.2510/1.2565. It can be assumed that the compression process will end today, where local leaps will occur, and the existing accumulation process will become a kind of catalyst for trade forces. The best tactic is to work on the breakdown of established boundaries.