EUR and GBP: The direction of the euro is not defined, and the pound strengthened in the hope of approval of the agreement
The weak report on industrial production in Germany once again reminded investors that the situation in the eurozone is far from ideal, and most likely, the expectation of a stronger strengthening of risky assets in the medium term will not be entirely the right decision.
According to the data, in January of this year, industrial production fell by 0.8% compared with December, while economists had expected growth of 0.4%.
It is quite possible that the revised report for December partially smoothed the market reaction, since in December 2018 compared with November, production increased by 0.8%, rather than decreased by 0.4%, as previously thought.
Questions are caused by exports, which did not change in January compared with December, but imports grew by 1.5%. Germany's foreign trade surplus in January amounted to 18.5 billion euros against 19.9 billion euros in December last year.
All this once again proves that even though the German economy avoided a recession at the end of last year, there is no obvious change for the better in the first quarter of this year.
In the afternoon, data on US retail sales came out, which turned out to be better than economists' forecasts, which returned demand for the US dollar.
According to a report by the US Department of Commerce, retail sales in January rose by 0.2% compared with the previous month to $ 504.4 billion, while economists predicted that sales would remain unchanged in January.
As for sales, excluding transportation costs, consumer spending increased by 1.2% compared with December 2018.
The technical picture in the EURUSD pair remained unchanged. Further growth will be limited by a large resistance level of 1.1260, from which sellers of risky assets will begin to return to the market. However, a breakthrough of this range may lead to a reversal of the downward trend. A more likely scenario for the pair would be a rebound from the resistance of 1.1260, with an update of a minimum of 1.1200. Only from there will real buyers return to the market, betting on further euro growth in the short term.
The British pound continues to gradually strengthen its position, as some experts expect the British Parliament to make concessions as the date of March 29, to which the UK leaves the EU, is appointed, and accept the Brexit agreement proposed by the Prime Minister.
The probability that it will be decided to extend the effect of Art. 50 of the Treaty of Lisbon, which provides for the extension of the UK exit from the EU, is higher. This increases uncertainty and will affect investment and the business climate in the future.
The EU today announced that there are currently no plans for new meetings at the level of political leadership to discuss Brexit, but they are open to meeting with negotiators from the UK at any time.The material has been provided by InstaForex Company - www.instaforex.com