German consumer confidence eased and French consumer spending disappointed. Forex traders now look forward to Italian business and consumer confidence data, but the EURGBP has reached the upper level of its horizontal resistance area. Will weak Eurozone economic data force a price action reversal, or will UK data extend that advance in this currency pair? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
UK data has been soft, but the Lloyds Business Barometer continued to improve. The Bank of England kept interest rates unchanged as expected, and the focus is now on Brexit and developments regarding the transition period. What impact will the final UK GDP reading for the third quarter have on the EURGBP? Today’s fundamental analysis will take a look at price action in both directions.
Here are the key factors to keep in mind today for Euro trades:
- German GfK Consumer Confidence Survey: The German GfK Consumer Confidence Survey for January was reported at 9.6. Economists predicted a figure of 9.8. Forex traders can compare this to the German GfK Consumer Confidence Survey for December, which was reported at 9.7.
- French Consumer Spending: French Consumer Spending for November increased by 0.1% monthly. Economists predicted an increase of 0.3%. Forex traders can compare this to French Consumer Spending for October, which increased by 0.2% monthly.
- French PPI: The French PPI for November was increased by 1.1% monthly. Economists predicted a flat reading of 0.0% monthly. Forex traders can compare this to the French PPI for October, which decreased by 0.1% monthly.
- Italian Confidence Data: Italian Business Confidence for December is predicted at 99.1 and Italian Consumer Confidence is predicted at 109.0. Forex traders can compare this to Italian Business Confidence for November, which was reported at 98.9 and to Italian Consumer Confidence, which was reported at 108.5.
- Eurozone Current Account: The Eurozone Current Account (n.s.a) for October is predicted at €26.7B. Forex traders can compare this to the Eurozone Current Account (n.s.a.) for September, which was reported at €35.8B.
- Advanced Eurozone Consumer Confidence: Advanced Eurozone Consumer Confidence for December is predicted at -7.1. Forex traders can compare this to the previous Eurozone Consumer Confidence for November, which was reported at -7.2.
Here are the key factors to keep in mind today for British Pound trades:
- UK GfK Consumer Confidence: UK GfK Consumer Confidence for December was reported at -11. Economists predicted a figure of -14. Forex traders can compare this to UK GfK Consumer Confidence for November, which was reported at -14.
- UK Lloyds Business Barometer: The UK Lloyds Business Barometer for December was reported at 10. Forex traders can compare this to the UK Lloyds Business Barometer for November, which was reported at 9.
- UK Public Sector Net Borrowing: UK Public Sector Net Borrowing for November is predicted at £5.0B and UK Public Sector Net Borrowing excluding Banking Groups at £6.1B. Forex traders can compare this to UK Public Sector Net Borrowing for October, which was reported at £10.5B and to UK Public Sector Net Borrowing excluding Banking Groups, which was reported at £11.2B.
- UK GDP: The UK Final GDP for the third quarter is predicted to increase by 0.3% quarterly and by 1.0% annualized. Forex traders can compare this to the previous third-quarter GDP, which increased by 0.3% quarterly and by 1.0% annualized. Final Private Consumption for the third quarter is predicted to increase by 0.4% quarterly, Final Government Spending is predicted to increase by 0.3% quarterly and Final Gross Fixed Capital Formation is predicted to decrease by 0.2% quarterly. Forex traders can compare this to previous third-quarter Private Consumption, which increased by 0.4% quarterly, to Government Spending, which increased by 0.3% quarterly and to Gross Fixed Capital Formation, which decreased by 0.2% quarterly. Final UK Exports for the third-quarter are predicted to increase by 8.1% quarterly and Final UK Imports are predicted to increase by 0.8% quarterly. Forex traders can compare this to the previous third-quarter UK Exports, which increased by 5.2% quarterly and to UK Imports, which increased by 0.8% quarterly. Final UK Total Business Investment for the third-quarter is predicted flat at 0.0% quarterly and to decrease by 0.6% annualized. Forex traders can compare this to previous UK Total Business Investment for the third quarter, which was reported flat at 0.0% quarterly and which decreased by 0.6% annualized.
- UK Current Account Balance: The UK Current Account Balance for the third-quarter is predicted at -£15.5B. Forex traders can compare this to the UK Current Account Balance for the second quarter, which was reported at -£25.2B.
Should price action for the EURGBP remain inside the or breakdown below the 0.8500 to 0.8575 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.8545
- Take Profit Zone: 0.8200 – 0.8275
- Stop Loss Level: 0.8600
Should price action for the EURGBP breakout above 0.8575 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.8600
- Take Profit Zone: 0.8700 – 0.8750
- Stop Loss Level: 0.8545
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