The euro managed to strengthen some positions against the US dollar after the release of reports indicating a small growth in the European economy. Especially pleased with the data on industrial production in France, which showed the recovery of the industry after the recession in the 3rd quarter.
According to a report by Insee, National Bureau of Statistics of France, industrial production in October this year increased by 0.4% compared to the previous month. However, it is not necessary to say that the growth may continue in the coming months, as recent data on surveys of companies give a lot of conflicting signals.
Data on the index of economic expectations in Germany also managed to please buyers of risky assets. According to a report by the ZEW research center, the index of economic expectations in December 2019 rose to 10.7 points from -2.1 points in November of this year, while economists predicted that the index will be -0.1 points in December. ZEW economists note that such a strong increase in the index is directly related to the expectation of an increase in exports and growth in personal consumption in Germany. The current economic conditions index also rose to -19.9 points against -24.7 points in November, with an economist forecast of -22.3 points.
As for the index of sentiment in the business environment of the eurozone from the ZEW Institute, it also showed growth, indicating the restoration of confidence in the company. According to the report, sentiment in the business environment rose to 11.2 points in December against -1.0 points in November this year, with the forecast growth to 2.2 points.
Data on the US economy in the sphere of small business also indicated an increase in optimism, but this did not lead to significant demand for the US dollar. The report indicated that the index of small business optimism in the United States in November of this year rose because the investment of companies remained at a high level, as well as the growth of hiring new workers and wages. According to the National Federation of Independent Business, the NFIB small business optimism index rose to 104.7 points in November from 102.4 points in October.
As for the technical picture of the EURUSD pair, the bulls continue to struggle for the resistance of 1.1070. Only the breakdown of this range will strengthen the demand for risky assets and return the trading instrument to the highs of last week in the area of 1.1115 and 1.1160. If the pressure on risk assets continues, the breakout of 1.1050 support will lead to a further downward correction in the area of 1.1000 and 1.0960 lows.
GBPUSD
The pound completely ignored the data on the UK economy, focusing on the new results of opinion polls and elections, which will begin in just a few days. According to the data, the UK GDP in October this year did not change compared to September, while the previous two months saw a contraction of the economy. Given these figures, we can say that the UK is close to a technical recession, although this month it was avoided. From August to October this year, compared to the same period in 2018, growth was also zero, and on an annual basis, the economy grew by only 0.2%.
All attention is now shifted to the elections that will be held this Thursday and as a result of which a new government will be formed. Most likely, Boris Johnson will retain the post of Prime Minister and lead a conservative government, however, for a real solution to the impasse with Brexit, conservatives need a majority in parliament.
As for the technical picture of the GBPUSD pair, the situation before the elections in the UK is unlikely to change significantly. The bulls all stormed the level of 1.3175, but each time they are met with active resistance by the sellers. There is also profit-taking on long positions with each unsuccessful growth above the range of 1.3170. It is likely that before the election itself, there may be a downward correction in GBPUSD, which will be stopped by the large support levels of 1.3090 and 1.3000.
