02.05.201803:38 Forex Analysis & Reviews: Euro and pound continue to lose ground

The European currency continued its decline against the US dollar, even though the introduction of tariffs on steel and aluminum by the US towards the European Union was postponed.

As it became known, such a decision was accepted by the President of the United States Donald Trump, giving the EU more time to negotiate an agreement that would allow and refuse tariffs. Europe received exactly one month to negotiate with the US about the agreement. Due to the holidays in several EU countries, comments from the representatives of the European Union have not yet been given.

The European currency meanwhile broke through further monthly lows and gradually decreases further to the level of support in the area of 1.2020, which I highlighted with special attention, as its breakdown can easily lead to the emergence of risky assets and to new annual lows.

The Australian dollar ignored the decision of the Reserve Bank of Australia.

As it became known today, the RBA left the key interest rate unchanged at 1.50%, saying that interest rates correspond to GDP forecasts and the rate of inflation growth.

According to the regulator, further progress towards targeted employment and inflation levels is expected to be gradual, as a higher Australian dollar rate may slow the growth of economic indicators. However, as we can see, the Australian dollar has lost a lot of positions in pairing with the US dollar since April 20, which will allow it to slightly reduce the above risks.

The RBA also did not forget to note the restrictions for bank lending, which help reduce risks in the housing market. As for the labor market, analysts expect a gradual reduction in unemployment against the backdrop of growth in outpacing employment indicators.

The British pound also continued to decline against the US dollar after weak data on the manufacturing sector.

According to the IHS Markit report, PMI's supply managers index for the UK manufacturing sector in April this year was expected to fall to 53.9 points against 54.9 points in March. Let me remind you that the value of the index above 50 indicates an increase in activity.

The decline in lending in the UK will also have a negative impact on economic growth. According to today's report of the Bank of England, in March this year demand for loans continued to decline. Consumer lending in the UK in March amounted to 4.2 billion pounds against 5.5 billion pounds in February, while mortgage lending in March rose slightly more than in February, to 4.0 billion pounds.