Yesterday’s trade saw EUR/GBP within the range of 0.7261-0.7326. The pair closed at 0.7268, going down 0.69% on a daily basis and extending losses from Wednesday.
At 7:19 GMT today EUR/GBP was down 0.06% for the day to trade at 0.7265. The pair touched a daily low at 0.7258 at 6:45 GMT.
Fundamentals
Euro area
Spanish Consumer Inflation – preliminary estimate
Spain’s annualized consumer inflation probably continued to decelerate in February, reaching a level of -1.5%, the preliminary estimate is expected to reveal today. If so, this would be the eighth consecutive month of negative inflation. In January the annual rate of inflation was reported at -1.3%, according to final data, released on February 13th. It has been the lowest annual inflation since July 2009. In January the largest downward pressure came from sectors such as transportation (-7.7% year-on-year) due to lower prices of fuel and lubricants. Consumers paid less also for leisure and culture (-0.7%), housing (-0.4%) and clothing and footwear (-0.1%), according to the report by the INE. In the meantime, prices at hotels and restaurants rose at an annual pace of 0.6% in January.
Key categories, included in Spans Consumer Price Index (CPI), are food and non-alcoholic beverages (accounting for 20% of the total weight) and transport (15%). Other categories are real estate (12%), hotels, coffee and restaurants (11.5%), clothing and footwear (9%) and entertainment and culture (7.5%). Health, communication, education and other goods and services comprise the remaining 25% of the index.
The CPI 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 trends. In case the annualized CPI dropped more than projected, this would have a bearish effect on the euro. The National Statistics Institute (INE) will release the preliminary inflation data at 8:00 GMT.
Spanish preliminary annualized CPI, evaluated in accordance with Eurostat’s harmonized methodology, probably fell at a pace of 1.3% in February, following a 1.5% decrease in January, as reported on February 13th. If so, this would be the eighth straight month of negative core inflation.
Italian Consumer Inflation – preliminary estimate
Italys preliminary annualized consumer inflation probably ticked up to -0.5% in February, according to expectations, from a final rate of -0.6% in January, as reported on February 20th. The latter has been the lowest annual inflation ever recorded and the third time the country registered a negative rate since 1958, when the national statistics began tracking consumer prices.
In January the largest downward pressures, causing an impact on annual inflation rate, were reported for energy (down 9.1%), transport (-4.2%), housing, water, electricity and gas (-1.2%) and recreation and culture (-0.5%). The largest upward pressures came from restaurants and hotels (+0.9%), furnishing and household equipment (+0.5%) and clothing and footwear (+0.2%).
Key categories, included in Italys Consumer Price Index, are food and non-alcoholic beverages (accounting for 16% of total weight), transport (15%), restaurants and hotels (11%) and housing, water, electricity and other fuels (10%). Other categories are clothing and footwear (9%), furnishing and household equipment (8%), recreation and culture (8%) and health (also 8%). Communication, education, alcoholic beverages, tobacco and other goods and services comprise the remaining 15% of the index.
The nations preliminary annualized CPI, evaluated in accordance with the harmonized methodology, probably decreased 0.3% in February, according to market expectations, following a 0.5% drop in January. The latter has been the lowest annual core inflation on record. The National Institute of Statistics (Istat) is to release the official CPI report at 10:00 GMT.
German Consumer Inflation – preliminary estimate
German preliminary annualized consumer inflation probably stood at -0.2% during February, according to the median forecast by analysts. In January the final rate of inflation was reported at -0.4%, or the first negative annual inflation since September 2009, mostly driven by a drop in energy costs.
Energy costs went down 9.0% year-on-year in January, as prices of heating oil plunged 30.8% and prices of motor fuels dropped 15.4%. Prices of other energy products were also down, namely charges for central and district heating (-2.1%) and gas (-1.5%). Electricity prices, on the other hand, continued rising in January, up 0.2%, according to the report by Destatis. Last month prices of food and non-alcoholic beverages were 1.0% lower compared to January 2014.
The Consumer Price Index (CPI) presents a general picture of the price change in the country, while encompassing all household types, all regions and all goods and services demanded (food, clothing, automobiles, rental, repair and hairdressing services etc). The index is based on a basket of goods and services, which is regularly renewed, so that goods and services, purchased more often by consumers, are included in the present survey.
The nations preliminary annualized CPI, evaluated in accordance with the harmonized methodology, probably fell 0.4% in February, after another 0.5% decrease in January. The latter has been the lowest annual harmonized inflation since September 2009. The harmonized methodology is used for the sake of consumer inflation comparison in an international context (member states in the Euro area). In case the annualized CPI fell more than expected and further distanced from the 2-percent inflation objective, set by the European Central Bank, this would certainly mount selling pressure on the euro. Destatis is scheduled to publish the CPI report at 13:00 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.7285. In case EUR/GBP manages to breach the first resistance level at 0.7309, it will probably continue up to test 0.7350. In case the second key resistance is broken, the pair will probably attempt to advance to 0.7374.
If EUR/GBP manages to breach the first key support at 0.7244, it will probably continue to slide and test 0.7220. With this second key support broken, the movement to the downside will probably continue to 0.7179.
The mid-Pivot levels for today are as follows: M1 – 0.7200, M2 – 0.7232, M3 – 0.7265, M4 – 0.7297, M5 – 0.7330, M6 – 0.7362.
In weekly terms, the central pivot point is at 0.7391. The three key resistance levels are as follows: R1 – 0.7443, R2 – 0.7495, R3 – 0.7547. The three key support levels are: S1 – 0.7339, S2 – 0.7287, S3 – 0.7235.
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