Yesterday’s trade saw EUR/GBP within the range of 0.7011-0.7110. The daily low has also been the lowest level since November 2007. The pair closed at 0.7065, down 0.48% on a daily basis and marking a seventh consecutive daily loss.
At 7:13 GMT today EUR/GBP was down 0.02% for the day to trade at 0.7064. The pair touched a daily low at 0.7035 at 4:00 GMT.
Fundamentals
Euro area
Spanish Consumer Inflation – final estimate
Spain’s final annualized consumer inflation probably accelerated to -1.1% in February, according to the median forecast by experts, while confirming the preliminary rate, reported on February 27th. If so, this would be the eighth consecutive month, during which annual consumer inflation remained in negative territory. In January the final annualized Consumer Price Index (CPI) fell 1.3%.
According to provisional estimates, higher annual inflation in January was mainly supported by an increase in costs of diesel and gasoline.
Key categories, included in Span’s 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 annual CPI accelerated more than projected, this would have a limited bullish effect on the euro. The National Statistics Institute (INE) will release its official report at 8:00 GMT.
Spanish final annualized CPI, evaluated in accordance with Eurostat’s harmonized methodology, probably matched the preliminary CPI performance of a 1.2% drop in February, which was reported on February 27th. If so, this would be the seventh consecutive month, when the harmonized inflation stood in negative territory. In January the final HICP was reported to have fallen 1.5% in line with the preliminary estimate.
Industrial Output
The seasonally adjusted index of industrial production in the Euro area probably rose 0.2% in January compared to a month ago, following a flat performance in December. Annualized output probably increased at a pace of 0.1% in January, following two consecutive months of contraction. In December industrial output fell at an annual rate of 0.2%, as production of energy contracted 1.7%, production of durable consumer goods went down 0.5%, that of capital goods decreased 0.3%, while that of intermediate goods was 0.2% lower. During the same period production of non-durable consumer goods expanded 0.7%.
The index, reflecting the business cycle, measures the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities. In case industrial output expanded more than anticipated, this would support demand for the euro, as this implies a higher probability of inflationary pressure. Eurostat is to publish the official data at 10:00 GMT.
United Kingdom
Balance of Trade
The deficit on United Kingdom’s goods trade balance probably narrowed to GBP 9.700 billion in January, according to market expectations, from a deficit figure of GBP 10.154 billion during the preceding month. The latter has been the most considerable trade deficit since September 2014, when a gap of GBP 10.506 billion was reported.
This indicator is also known as visible trade balance, because it reflects the difference in value between exported and imported physical goods, without the inclusion of exported and imported services. Since UK economy is to a great extent dependent on trade, the visible trade balance is considered as a key factor, providing clues over the sustainability of economic growth.
The gap on the nations total trade balance widened to GBP 2.895 billion in December from a revised GBP 1.80 billion deficit, posted in November. Decembers deficit was boosted by a surge in oil imports.
Exports of goods rose by GBP 0.1 billion to reach GBP 24.6 billion in December. Exports of oil increased GBP 0.2 billion in December, while the volume of oil exports grew 22.7% over the same period, according to the report by the Office for National Statistics (ONS). Imports of goods went up by GBP 0.9 billion in December, mostly reflecting a GBP 0.7 billion surge in imports of fuels. The volume of oil imports rose to the highest level since July 2008, soaring 37.5% between November and December.
In case the UK trade deficit narrowed more than anticipated, this would provide support to the pound. The Office for National Statistics will publish the official trade data at 9:30 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.7062. In case EUR/GBP manages to breach the first resistance level at 0.7113, it will probably continue up to test 0.7161. In case the second key resistance is broken, the pair will probably attempt to advance to 0.7212.
If EUR/GBP manages to breach the first key support at 0.7014, it will probably continue to slide and test 0.6963. With this second key support broken, the movement to the downside will probably continue to 0.6915.
The mid-Pivot levels for today are as follows: M1 – 0.6939, M2 – 0.6989, M3 – 0.7038, M4 – 0.7088, M5 – 0.7137, M6 – 0.7187.
In weekly terms, the central pivot point is at 0.7231. The three key resistance levels are as follows: R1 – 0.7284, R2 – 0.7356, R3 – 0.7409. The three key support levels are: S1 – 0.7159, S2 – 0.7106, S3 – 0.7034.
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