Yesterday’s trade saw EUR/GBP within the range of 0.7335-0.7441. The daily low has also been the lowest level in more than six years. The pair closed at 0.7384, losing 0.65% on a daily basis.
At 7:24 GMT today EUR/GBP was unchanged for the day to trade at 0.7384. The pair touched a daily low at 0.7379 during early Asian trade.
Fundamentals
Euro area
France consumer inflation
The annualized consumer inflation in France probably continued to slow down in January, falling to -0.2%, according to the median forecast by experts, from a rate of 0.1% during the preceding month. If so, this would be the lowest annual inflation in more than five years. In December annual inflation decelerated, due to lower prices of energy and food. During the month upward pressures came from prices of tobacco (+3.5% year-on-year), other services (+2.2%), actual rentals and services for dwellings (+1.5%) and clothing and footwear (+0.2%). At the same time, cost of petroleum products slumped at an annualized rate of 10.6%, while that of medical products – by 3.0%. Additional downward pressure came from categories such as food (-0.6% year-on-year), manufactured products (-1.1%) and transport (-0.2%).
Key categories, included in Frances Consumer Price Index (CPI), are manufactured products excluding clothing and pharmaceuticals (accounting for 20.6% of the total weight) and food (16.4%). Other categories, which comprise the index, are healthcare (10.1%), energy (8.7%), rentals and real estate services (7.4%), transport and communication services (5%), clothing and footwear (4.7%) and pharmaceuticals (4.6%).
The index measures the change in price levels of the above mentioned basket of goods and services from consumer’s perspective and also provides clues over purchasing tendencies. In case the CPI decelerated more than anticipated, this would have a bearish effect on the euro. The National Institute for Statistics and Economic Studies will release the official report at 7:45 GMT.
France’s annualized CPI, evaluated in accordance with Eurostat’s harmonized methodology, probably fell to -0.3% in January, following a rate of 0.1% in the prior month. If so, this would be the first period with a negative annual inflation in more than four years. In monthly terms, the harmonized CPI probably dropped 1.0% in January, after climbing as much as 0.1% in December.
ECB policy meeting minutes
At 12:30 GMT for the first time the European Central Bank is to publish the minutes from its most recent meeting on policy, held on January 22nd. The minutes offer a fair and balanced reflection of policy deliberations, while providing the rationale behind the central banks monetary policy decision.
“Now that people know what they say is for the record, there might be some who are more careful on how they state their position, but others will also want to make their case more forcefully,” said Thomas Harjes, senior European economist at Barclays Plc in Frankfurt cited by Bloomberg. “More transparency is always welcome.”
“With the publication of accounts, people will have their dissent on the record,” said Marco Valli, an expert at UniCredit SpA in Milan, cited by the same media. “Disagreement is natural when you have 25 people sitting around a table trying to find a sensible monetary policy response to the current macro picture.”
Eurozone Consumer Confidence – preliminary estimate
Confidence among consumers in the Euro area probably improved for a third consecutive month in February. The preliminary value of the consumer confidence index probably rose to -7.55 from a final value of -8.5 in January. If so, this would be the highest level of confidence since June 2014, when the indicator was reported at a final value of -7.5. The index measures consumer confidence on a scale of -100 to +100. A reading of -100 suggests a lack of confidence, zero means neutrality and a reading of +100 indicates extreme levels of confidence. The index reflects the level of optimism, which consumers have about economic development in the region. The Business and Consumer Survey is conducted by phone and includes 23 000 households in the Euro area. The questions asked stress on current economic and financial situation, savings intention and also on expected developments regarding consumer price indexes, general economic situation and major purchases of durable goods. This indicator is one of the five major components, that comprise the Economic Sentiment Indicator (ESI).
Higher confidence usually implies greater willingness to spend, including large-ticket purchases, while consumer spending is a key factor behind economic growth. Therefore, in case the consumer confidence index improved more than anticipated, this would cause a bullish impact on the euro. The European Commission is expected to release the preliminary reading at 15:00 GMT.
United Kingdom
CBI Industrial Trends Survey
The gauge of industrial orders in the United Kingdom probably improved to a reading of 6 during the three months to February, according to expectations, from 4 in the previous period. If so, this would be the highest reading since the period to August 2014, when a value of 11 was reported. This indicator reflects the net balance between companies, that registered an increase in industrial orders during the respective period of three months and those, that registered a drop. It is the oldest indicator, released from the UK private sector, to show the development tendency in the countrys industry. The Industrial Trends Survey by the Confederation of British Industry (CBI) provides expert qualitative opinion from senior manufacturing executives, on past and expected trends in output, exports, prices, costs, investment intentions, business confidence and capacity utilization. A level above zero suggests that volume of orders is projected to increase, while a level below zero indicates that expectations point to lower volumes. If the survey showed predominant optimism, this would have a limited bullish effect on the sterling. The CBI will announce the results from its survey, encompassing 17 industries, at 11:00 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.7387. In case EUR/GBP manages to breach the first resistance level at 0.7438, it will probably continue up to test 0.7493. In case the second key resistance is broken, the pair will probably attempt to advance to 0.7544.
If EUR/GBP manages to breach the first key support at 0.7332, it will probably continue to slide and test 0.7281. With this second key support broken, the movement to the downside will probably continue to 0.7226.
The mid-Pivot levels for today are as follows: M1 – 0.7254, M2 – 0.7307, M3 – 0.7360, M4 – 0.7413, M5 – 0.7466, M6 – 0.7519.
In weekly terms, the central pivot point is at 0.7408. The three key resistance levels are as follows: R1 – 0.7446, R2 – 0.7500, R3 – 0.7538. The three key support levels are: S1 – 0.7354, S2 – 0.7316, S3 – 0.7262.
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