Yesterday, British Prime Minister Theresa May blew up markets with claims that she admits the possibility of holding a second referendum on Brexit. And until the traders grabbed a "piece of cake" of a pound from the very lows and tried to open long positions, made a series of "but", due to which the bullish movements quickly ended. Despite the fact that Theresa May presented a new plan, designed to provide Parliament with support for her divorce proposal package with the European Union, she also stated that she was not opposed to holding a second referendum on Brexit, but on the condition that her plan would be adopted by Parliament.
Also, the British Prime Minister agrees to make other concessions in order to convince opposition-minded legislators, however, all this only after the ratification of her proposal. In other words, nothing has changed, as it is unlikely that the British Parliament will agree to such an alternative, and the meaning of the fourth vote on this topic is completely lost.
As for the technical picture of the GBP/USD pair, after an unsuccessful attempt to increase, the pressure on the pound returned. A breakthrough of the lower border of 1.2685 may lead to a new, larger will of sales of the trading instrument with the renewal of lows in the area of 1.2615 and 1.2500, where I recommend fixing the profits. If the bulls manage to stay above the support of 1.2685 today, it will be a good signal for the future upward correction of the pound.
The data on the US economy did not have much impact on the market, as well as the statements of the Fed representatives.
According to the report of the National Association of Realtors, sales in the secondary housing market in the United States in April of this year decreased by 0.4% compared with the previous month and amounted to 5.19 million homes per year. Economists had expected sales to grow by 2.7%, to 5.35 million homes. Compared with the same period of the previous year, sales in April fell by 4.4%. The NAR noted that the housing market shows weak dynamics compared with other sectors of the economy, and this is provided that mortgage rates remain at a low level.
The speech of the President of the Federal Reserve Bank of Boston, Eric Rosengren, was mainly related to interest rates and inflation. In his opinion, there is currently no reason to change interest rates now, as the current Fed policy helps to return inflation to the target level of 2%.
Rosengren also believes that import duties imposed by US President Donald Trump may accelerate the return of inflation to a target level of 2%. However, the trade conflict between the United States and China is a negative risk to the prospects for the US economy.
As for the technical picture of the EURUSD pair, the further downward movement will depend on the support level of 1.1140, a breakthrough of which will only increase the pressure on risky assets and lead to an update of the minimum of 1.1110. The growth of the euro will be limited to the upper limit of the side channel in the area of 1.1190.
The material has been provided by InstaForex Company - www.instaforex.com