06.02.2019: EUR and GBP sapped (EUR/USD, GBP/USD)
The US dollar is extending strength across the board. Demand for the US currency boosted during the European trade. The economic calendar lacks data or events which could prop up the single European currency. Reports of secondary importance also pushed the euro down.
Today Germany’s economy ministry reported that factory orders contracted 1.6% in December, much worse than the forecast for a 0.3% increase. This dismal report signals that data on industrial production which is due on Thursday will also reveal a negative trend in Germany’s economy which is seen as the most powerful economy of the eurozone.
In this context, the euro/dollar pair sank today below 1.1400. Analysts say the pair is set to trade at the same level before the US comes up with its macroeconomic data in the early North American trade. Investors are alert to a trade balance report. Yesterday’s downbeat non-manufacturing PMI from the Institute for Supply Management did not affect market sentiment on the US dollar.
Meanwhile, the pound sterling is also trading lower. The pound/dollar pair settled down at 1.2965. The currency pair went into a nosedive last week due to unwelcome news on Brexit.
The EU authorities called on UK Premier Theresa May to set out commitments on the border with Northern Ireland in the Brexit deal. There is a growing likelihood that the British Prime Minister will hardly convince EU policymakers of the Irish backstop. The UK is due to leave the EU until March 29. Now market participants are worried that the UK is facing hard Brexit.
Tomorrow the Bank of England is holding a policy meeting which is likely to end with predictable outcome. The regulator is expected to keep the key interest rate steady. Traders are more interested in forecasts on further economic developments under Brexit conditions.
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