05.02.2019: Which country has worse conditions: UK or EU (EUR/USD, GBP/USD)
The euro has finally lost ground against the US dollar. The weak macroeconomic statistics from the euro zone put the single European currency under pressure.
The euro-dollar pair has slid below the level of 1.1420. Downbeat economic reports disappointed investors, so the euro weakened.
The retail sales volume in the euro zone plunged by 1.6% in December. Importantly, this indicator was reported for the pre-Christmas period that is considered to be the peak of consumer activity. But the actual data signals that consumers were occupied with other things but not buying presents. In annual terms the retail sales grew by 0.8% versus the previous rise of 1.8%.
On the other hand, European manufactures showed more robust activity. The composite PMI reading exceeded expectations in January. It came in at 51 points. The services PMI showed the same reading. However, the manufacturing PMI failed to meet the forecast.
Meanwhile in the United Kingdom, the services PMI, which is the key gauge of economic health, declined in January. The index came close to the 50 level which separates expansion and contraction zones.
Traders reacted to this news immediately – they started selling the pound sterling. The GBP/USD pair approached the level of 1.3000. Analysts say that the British currency may fall even lower. Investors are seriously concerned about the economic conditions in the country ahead of Brexit.
The scenario of the harsh Brexit became more possible. On Monday negotiations between the UK and EU officials brought no results again. Thus, confidence in Prime Minister Theresa May and her political party decreased.
Probably, Brexit will have long-term impact upon the British pound. On Thursday the British currency is facing another challenge – the Bank of England monetary policy meeting.
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