31.05.202112:35 Forex Analysis & Reviews: Forecasts for EUR/USD and GBP/USD: Buying pressure on both euro and pound is easing.

The reports that were published last Friday set off a slight decline in euro, but the buying pressure that followed quickly offset it.

Today, the markets are expected to remain calm, mainly due to the holidays in US and UK.

On Friday, it was reported that consumer confidence in the Euro area rose to its highest level in more than three years, thanks to the easing of restrictions related to Covid. According to a poll made by the European Commission, economic confidence rose to 114.5 points in May, from 110.5 points in the previous month.

Most likely, the reason for the increase is the strong growth in orders, as well as the improvement in service confidence, which jumped to 8.8 points. Consumer sentiment is also at -5.1 points, which is fully in line with the preliminary estimate.

These indicators grew because of the positive changes on the financial situation of households and their expectations regarding the overall situation of the economy. In fact, confidence in retail has also grown, reflecting improved managers' ratings.

But projections say inflationary pressures could jump due to the lack of resources. Once this deficit narrows, inflation will drop sharply.

Today, Germany and Italy will release their CPI data for May, which is expected to show a slight slowdown in growth. Such is a huge contrast to the sharp jump in CPI in France, which rose to 1.4%. The main cause of the increase is the 11.7% gain in energy prices.

As for Italy, producer prices continued to grow, rising by 6.5% year-on-year and by 1.1% month-over-month.

And as mentioned earlier, all these drove the market last Friday, but a lot depends on 1.2215 today because its breakdown will set off a jump towards 1.2260 and 1.2320. Meanwhile, dropping below the level will result in a collapse towards 1.2180, and then to 1.2135 and 1.2080.

GBP

Pound traded upwards last Friday despite the ongoing trade issues between UK and EU. Maros Sefcovic, a senior official from the European Commission, said the UK should abandon ideology in favor of pragmatism to address the challenges posed by the Brexit deal.

The main problem is the recent inspections in the ports of Belfast and Larne, which angered union members. According to them, Northern Ireland, which, because of the Brexit deal remained in the EU single market, is being separated from the rest of the UK. The agitation escalated into threats, violence and unrest.

UK requested to have slight amendments in the Brexit deal, but the EU refused and said the UK should comply with the clauses of the agreement.

Meanwhile, the Bank of England hinted at a possible rate hike next year, saying that monetary policy may change sooner if the UK economy recovers quickly. However, the picture must be very clear, before the central bank will make decisive actions.

All this led to an increase in pound, but a lot will depend on 1.4220 today because climbing above it will set off a much larger jump towards 1.4265 and 1.4310. Accordingly, dropping below the level will result in a collapse to 1.4175 and 1.4135.