GBPUSD

The pound managed to continue its upward correction, which has been observed since yesterday. More than good data on the growth of retail sales in the UK returned to the market even pessimistic traders on bullish growth.

The report, which was published today, indicated a sharp increase in retail sales after a decline for two consecutive months. Such data, though it does not affect the slowing UK economy in the 2nd quarter of this year, will avoid an impending recession. However, much, of course, will depend on Brexit and the scenarios under which it will develop.

According to official data, in June this year, retail sales increased by 1.0% compared to May. The largest growth was achieved by sales of clothing and footwear. As for the three-month reporting period, sales increased by 0.7% from April to June.

However, as noted above, the problems with the UK's withdrawal from the EU remain quite serious, and the postponement of the break-in trade relations from March 29 to October 31, in fact, only complicates everything.

This was also mentioned today in the report on the management of fiscal responsibility in the UK, where it was pointed out that a high probability of an annual recession in the case of Brexit without an agreement. In this scenario, GDP will fall by 2.1%. Additional damage to tax revenues is also predicted in the case of the most severe Brexit scenario. The office also noted that to maintain the UK economy in a more or less normal position, additional borrowing of 30 billion pounds a year would be required.

As for the technical picture of the pair GBPUSD, the further growth of the pound is unlikely to continue as the trading instrument approaches the highs around 1.2520 and 1.2560. In the area of these levels, bears, putting on the toughest scenario for Brexit and the new British Prime Minister Boris Johnson, will show themselves most actively, and this will be done in order to keep the current downward trend, formed on June 25 this year.

EURUSD

The European currency in the absence of important fundamental statistics declined in the morning after the news that the European Central Bank may revise the inflation target. Such messages appeared on Bloomberg Television. Let me remind you that the current target level of inflation now stands at a little less than 2%.

It is not surprising that the euro failed in this news, as many traders and economists expect stimulus measures from the European regulator, which it can announce at its next meeting on monetary policy.

There are also rumors on the market that the ECB will adjust its statement following the July meeting and announce that in the coming months it may need to reduce interest rates – and this is a very bad sign for the euro and further growth prospects. With this development of the situation, it is possible to lay on a medium-term decline of the EURUSD trading instrument in the area of 1.1000 and 1.0900 levels.

As for the current short-term picture, a large support level of 1.1190 remains, and its breakthrough will lead to a further bearish trend and a test of the lows of 1.1130 and 1.1070.