Another rumor associated with Brexit, supports the British pound and the euro

The euro and the pound rose on Monday against the US dollar, offsetting a significant portion of the losses that were made in risky assets on Friday last week in the afternoon.

Brexit and the next hearing

One of the news, or rather rumors that could support the pound and the euro today, were new conversations that representatives of the UK and the European Union may soon move to an agreement on Brexit.

The rumor is that the EU is discussing the possibility to allow UK representatives to exercise control of goods supplied to Northern Ireland from Britain after Brexit, this has led to the growth of the pound to the area of the highs of this month. It should be noted that prior to these rumors, the control of goods should have been entrusted to the inspectors of the bloc.

The statements made today by the International Monetary Fund could also support the pound, as they saw a call for action against Brexit.

The IMF said that a disorderly and abrupt exit from the European Union could cause serious damage to the UK economy. The scale of preparation for Brexit makes the transition period necessary, as the rejection of it will damage both the British and the EU economy.

Inflation in the Eurozone

The data on inflation in the euro area, which came out in the first half of the day, did not lead to a significant change in market forces, as it completely coincided with the forecasts of economists.

According to the report, the consumer price index CPI of the eurozone in August this year increased by 0.2% compared to July, while in relation to the same period of 2017, inflation increased by 2.0%, which fully coincided with the forecasts of economists.

The growth was due to the rise in energy prices, while food and other volatile categories of goods slightly changed in price.

As for the core inflation, to which the European Central Bank places some emphasis, it should be noted that the price increase in August is also 0.2%, while compared to the same period in 2017, inflation increased by 1.0%. Let me remind you that the target level for the ECB is 2%.

The technical picture for the EUR/USD pair

As for the technical picture of the EUR/USD pair, the level of 1.1680 will be important today, consolidation above which will lead to the formation of a new lower limit of the upward channel from the low of today and the formation of a large upward momentum aimed at the highs of this month in the region of 1.1725 and 1.1790. Also, a good signal for buying the euro will be the return of the trading instrument to the 50-day moving average.

Under the scenario, if buyers fail to climb above 1.1680 for today, and at the end of the day trading will end below the 50-day average (at 1.1665), bears will quickly return to the market, which will lead to the formation of a larger downward trend before the meeting of the Federal Reserve, which is scheduled for next week.