Eurozone confidence data for January was released this morning and showed an improvement in most categories. The Euro failed to rally as the Eurozone Business Climate Indicator disappointed. German CPI data is predicted to show a spike in deflationary pressures monthly. The EURGBP remains inside of its horizontal resistance area, how will the MPC meeting out of the UK impact price action? Today’s fundamental analysis will take a look at price action in both directions.
Bank of England Governor Carney will host his last MPC meeting today, as the UK is set to leave the EU in roughly 36 hours. No change in the current monetary policy is expected, but forex traders will focus on Carney’s final remarks. Boosting sentiment for the British Pound as a strong reading in the Lloyds Business Barometer. How will the EURGBP react after the press conference following the interest rate announcement? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Here are the key factors to keep in mind today for Euro trades:
- German Unemployment Change and German Unemployment Rate: The German Unemployment Change for January was reported at -2K and the German Unemployment Rate at 5.0%. Economists predicted a reading of 5K and 5.0%. Forex traders can compare this to the German Unemployment Change for December, which was reported at 8K and to the German Unemployment Rate, which was reported at 5.0%.
- Italian Unemployment Rate: The Italian Unemployment Rate for December was reported at 9.8%. Economists predicted a figure of 9.7%. Forex traders can compare this to the Italian Unemployment Rate for November, which was reported at 9.8%.
- Eurozone Unemployment Rate: The Eurozone Unemployment Rate for December was reported at 7.4%. Economists predicted a figure of 7.5%. Forex traders can compare this to the Eurozone Unemployment Rate for November, which was reported at 7.5%.
- Eurozone Confidence Data: Eurozone Economic Confidence for January was reported at 102.8. Economists predicted a figure of 101.8. Forex traders can compare this to Eurozone Economic Confidence for December, which was reported at 101.3. Eurozone Industrial Confidence for January was reported at -7.3. Economists predicted a figure of -8.8. Forex traders can compare this to Eurozone Industrial Confidence for December, which was reported at -9.3. Eurozone Services Confidence for January was reported at 11.0. Economists predicted a figure of 11.3. Forex traders can compare this to Eurozone Services Confidence for December, which was reported at 11.3. Final Eurozone Consumer Confidence for January was reported at -8.1. Economists predicted a figure of -8.1. Forex traders can compare this to previous Eurozone Consumer Confidence for January, which was reported at -8.1. The Eurozone Business Climate Indicator for January was reported at -0.23. Economists predicted a figure of -0.20. Forex traders can compare this to Eurozone Business Climate Indicator for December, which was reported at -0.32.
- Preliminary German CPI: The Preliminary German CPI for January is predicted to decrease by 0.6% monthly, and to increase by 1.7% annualized. Forex traders can compare this to the German CPI for December, which increased by 0.5% monthly and 1.5% annualized. The EU Harmonized German CPI for January is predicted to decrease by 0.7% monthly, and to increase by 1.7% annualized. Forex traders can compare this to the EU Harmonized German CPI for December, which increased by 0.6% monthly and 1.5% annualized.
Here are the key factors to keep in mind today for British Pound trades:
- UK Lloyds Business Barometer: The UK Lloyds Business Barometer for January was reported at 23. Forex traders can compare this to the UK Lloyds Business Barometer for December, which was reported at 10.
- Bank of England Interest Rate Decision, Asset Purchase Target and Corporate Bond Target: The Bank of England is predicted to keep interest rates at 0.75%, the Asset Purchase Target £435B and the Corporate Bond Target at £10B. Forex traders can compare this to the previous Bank of England meeting where the UK central bank decided to keep interest rates at 0.75%, the Asset Purchase Target £435B and the Corporate Bond Target at £10B.
Should price action for the EURGBP remain inside the or breakdown below the 0.8425 to 0.8485 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.8460
- Take Profit Zone: 0.8200 – 0.8275
- Stop Loss Level: 0.8500
Should price action for the EURGBP breakout above 0.8485 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.8500
- Take Profit Zone: 0.8595 – 0.8655
- Stop Loss Level: 0.8460
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