Preliminary indices of business activity in the US were better than forecasts. So, the index of business activity in the manufacturing sector increased from 53.1 to 54.5 while in the services sector, data grew from 55.3 to 55.9. As a result, the composite index of business activity grew from 54.8 to 55.7. Against this background, the pound continued to go down but the euro stayed the same, in many respects, due to similar data in Europe. The index of business activity in the service sector of Europe fell from 55.8 to 54.9 and the composite index declined from 56.7 to 55.9,. Meanwhile, the production index rose from 58.1 to 58.6. However, this alone would not be enough for the euro to resist. It was also supported by data from France and Germany. In France, all indices showed good growth. In Germany, the production index has grown strongly. However, the problem is that even if the situation with the business activity in France and Germany is not too bad, there is still a general decline in indices in other countries of the euro area. This means everything is very bad.
Today, the preliminary data on the UK GDP for the third quarter will come out, which may show a slowdown in economic growth from 1.5% to 1.4%. Against the background of statements of fears about the consequences of Brexit, the slowdown in economic growth will have an extremely negative impact on the pound. Nevertheless, the pound has the opportunity to recover quickly, as in the US, because of sales of new homes which are expected to fall by 0.9%. If the forecast is confirmed, it will mean that sales are falling for the third month in a row.
The EUR/USD pair will react to US statistics, which will allow it to grow to 1.1800.
The GBP/USD pair will first drop to 1.3075 and then return to 1.3125.
