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Business / Finance

THE GBP/USD. Red letter day: key macroeconomic reports of Britain came in the "red zone"

Analytical reviews Forex 09.08.2019 at 16:08

Daily analytical reviews of the Forex market from InstaForex company

The Pound is not at its best: barely subsided another passion Bracito as the Briton came under pressure from macroeconomic reports. Major and minor indicators came out today in the "red zone", complementing the already gloomy fundamental picture for gbp/usd. After almost a week of the flat the couple came out of the price range 1,2110-1,2190, down in the 20-th figure and updating the 32-month lows. The last time such a pair was lower in January 2017.

First of all traders disappointed with the GDP of Britain. In June, the indicator came out at zero (when growth forecast to 0.1%) on a monthly basis. Overall, in the second quarter, the UK economy slowed to 0.2%. It is worth noting that the QoQ figure for the first time since March 2013 (!) was in the negative region. In annual terms, the British economy disappointed investors, rising only 1.2% (lowest value since the second quarter of 2018).

the structure of the indicators suggests that the most active rate decreased component inventory. According to experts, on the eve of 29 March (the original date Brekzita) many businesses and companies spend their reserves. This trend has become widespread, and in the end, stocks fell by almost 4.5 billion pounds, "taking" thus from GDP by more than two percent (to be more precise, of 2.15%).

Summed up the British car industry – again because Brekzita. Last week it became known that the production of cars in the country of Albion has decreased by almost 20% in connection with reduction in demand (especially down sales of diesel cars in the EU). Significantly decreased and the level of investment in the British car industry – more than 70%. The probability of a "hard" scenario discourages potential investors, with corresponding impact on the investment climate in the country. With the arrival of Johnson the General nervousness has increased and some plants have been preserved by the manufacturers. In addition, the car companies were forced to spend a lot of money (according to some estimates – more than 300 million pounds) in preparation for the "hard" Bracito.

in addition to GDP also disappointed, and industrial production in Britain. In monthly and annual terms the indicator dropped into negative territory (-0.1 percent and -0.6%, respectively). But the volume of manufacturing fell immediately to -1.4% (yoy) – the weakest result since December last year. And although the experts expect the downward dynamics of the above indicators, the actual numbers were worse than pessimistic forecasts. The rest of today's releases also didn't impress traders of gbp/usd. Dynamics of activity in the construction sector decelerated to -0.2% yoy (the lowest since December 2018), and in the sphere of services – up to zero level.

Thus, macroeconomic reports on the background of General uncertainty about the prospects for Brekzita have exerted strong pressure on the pound. The bears have used this combination and pushed gbp/usd to the 20th figure. However, the southern pulse not received its continuation, despite a bunch of negativity. First, weak economic reports have not such a strong impact on the pair, as the question Brekzita.

secondly, during the American session, the dollar again lost its position because the next portion of the review Donald trump. He again repeated his thesis that is too expensive dollar has a negative impact on the economy in General and manufacturing in particular. He also again asked the Federal reserve to mitigate the monetary policy. However, he first elaborated on their demands – in his view, regulators need to reduce the rate by 100 basis points.

And even though the market is already accustomed to such rhetoric, in this case, trump has had some pressure on grinbek. After all, in addition to criticism of the Federal reserve, the us President announced and news "from the front trade war". He said that the negotiation process is ongoing, but Washington is not ready to make a deal with Beijing because of the ongoing impasse. In addition, trump stressed that while not signed a trade agreement, the us would not do business with Huawei (and thus to give the Chinese technology giant temporary licenses). This is the response of Americans on the refusal of the Chinese to acquire U.S. agricultural products. It is noteworthy that the leaders of countries actually violated its commitments made at the summit Big twenty.

In General, the rhetoric trump weighed on markets: yields on 10-year treasuries began again to decline, the stock market dipped slightly, while the dollar index is once again headed to the base of the 97th figure. This dynamic has allowed the traders of the gbp/usd to hold the pair from further fall to the base 20 of figure. But the level of support (and correspondingly, the goal of the southern movement) now is there – namely at the level of 1.2010 (bottom line of Bollinger Bands indicator on D1 and MN).

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