The international monetary fund cut its forecast for global growth to 3.2% for 2019 and to 3.5% for 2020. The fund named weakening inflation and softening economic activity along with trade tensions as the biggest barriers currently. They noted that even though we are not in a recession risks are increasing. Interesting was the fact that it increased US growth expectations to 2.6% for 2019 but kept a lower figure steady at 1.9% for 2020. On the opposite side, Europe is forecasted to remain at 1.3% in 2019 and expected to increase to 1.6% in 2020. The fund also made reference to the tariffs the US threatened to enact on Chinese goods giving the matter significant importance as it brakes economic investment and removes supply chains reducing the probabilities of economic growth. Furthermore, Brexit uncertainty, European economic weakening, geopolitical tensions from the Middle East are all subjects that limit growth.
Boris Johnson the new UK PM
Boris Johnson won the leadership of the Conservative Party on Tuesday which makes him the new PM. Johnson aims to negotiate a new Brexit deal with the EU to soften the process. However, if Europeans refuse to renegotiate, he has promised to leave on the agreed date of October the 31st 2019, whatever the case. Johnsons approach towards Brexit could create great volatility for the GBP. The pound has fallen sharply in recent weeks on concerns about a “no-deal” Brexit, and stands near $1.24, around its lowest level for two years. Among the most significant reactions of the news release, Goldman Sachs raised its probability of a no-deal Brexit to 20% from 15% while EU negotiator Michel Barnier said they are looking forward to working with the new PM to achieve an orderly Brexit. Many fear that PM Johnson’s view to drop out of the EU with a deal or without, could put London in a very difficult position. At the same time Johnson is putting a lot of pressure on the EU, as they may have to change their approach to handle the situation.
EURGBP 4 Hour
Support: 0.8920 (S1), 0.8880 (S2), 0.8830 (S3)
Resistance: 0.8970 (R1), 0.9000 (R2), 0.9040 (R3)
XAUUSD 4 hour
Support: 1414 (S1), 1400 (S2), 1382 (S3)
Resistance: 1425 (R1), 1435 (R2), 1450 (R3)
