18.02.202109:30 Forex Analysis & Reviews: Trading Plan for EUR/USD and GBP/USD 2/18/21

The statistics showed once again that the American economy is doing much better than the European or British ones. At least, it recovers noticeably faster. However, this does not affect the growth rate of the dollar too much. No, of course, it is growing, it is not as we would like. And even then only in relation to the single European currency, while the pound continues to hold at multi-year highs. However, we must admit that the pound stands still for good reason since inflation in the UK did not fall from 0.6% to 0.4% but accelerated to 0.7%. The rise in inflation was not just a pleasant surprise. It also reduces the risks of easing the Bank of England's monetary policy. Although this step is largely inevitable due to the problems that the UK economy began to experience after the entry into force of a new trade agreement with the European Union. But the inflationary dynamics clearly push this step to a slightly more distant perspective.

Inflation (UK):

However, it is worth returning to the American statistics, which turned out to be much better than even the most daring forecasts. First, the previous data on retail sales and industrial production were slightly revised. So, it turns out that sales in December grew not by 2.9% but to 2.5%. However, the industry declined by -3.2% whereas previously it was assumed that the rate of decline was -3.6%. In general, the revision of the data was largely neutral. On the one hand, it's a deterioration, and on the other, there's an improvement. But the latest data clearly exceeded the forecasts and completely leveled all possible negativity from the revision of previous values. For example, the retail sales growth rate was supposed to be only 2.8%, but it turned out that sales accelerated to a crazy 7.4%. The rate of decline in industrial production, instead of slowing to -2.7% decreased to -1.8%. So both consumer activity has increased sharply, and the industry is clearly showing signs of a solid recovery. In general, the US economy is not feeling perfect, but there is still a noticeable improvement.

Industrial Production (United States):

Today, the dollar's strengthening may continue due to applications for unemployment benefits. The number of initial requests may be reduced from 793 thousand to 765 thousand. The number of repeated ones should decrease from 4.545 thousand to 4.290 thousand. So the labor market in the United States continues to show a clear improvement in the situation. And apparently, the strengthening of the dollar today will not bypass the sides and the pound, which simply has nothing to defend itself with. After all, some data is published only for the United States.

Unemployment Benefit Reclaims (United States):

The EUR / USD currency pair has been showing an active downward interest since February 16, as a result of which the upward movement from the local minimum of 1.1950 has already been won back by market participants by more than half. In the case of holding the previously set downward movement, market participants may overcome the psychological level of 1.2000 and head to the support point of 1.1950.

The GBP / USD currency pair has a slight pullback from the local high of the medium-term trend of 1.3950, thereby maintaining the overbought status in the market. The pound is likely to continue its consistent decline with the prospect of a move to 1.3750.