16.12.2019: Euro and pound enter correction phase. Outlook for EUR/USD и GBP/USD

The upward movement of the European currencies was capped by the preliminary PMI data on key economic sectors of the eurozone and the UK. The euro/dollar pair failed to get back back to the previous week’s highs despite the optimism about a trade deal that contributes to the weaker dollar. During the session, the pair was trading flat near 1.1140. Technically, analysts expect a decline towards 1.1080 and 1.1060. It is obvious that markets can be more sensitive to negative news from the eurozone as it will allow them to open sell orders. Besides, bears’ attention was attracted by reports from Markit. Germany’s manufacturing PMI has been dropping for a year already. In November, the indicator slumped to 43.4 points, whereas economists had expected an uptick to 44.6 points. The PMI data in the eurozone showed that the region’s economy has slipped into a decline for the first time since 2013 and needs additional stimulus. In case the final data meets the preliminary estimates, there will be a new wave of discussions about the ECB’s key rate cut. In the UK, the manufacturing and services PMI data also turned out to be disappointing. The indicators’ readings are below the forecast. The services sector business activity showed the fastest drop in the recent 9 months. The indicator cooled to 49.3 points. The current economic statistics have influenced the market’s mood. The pound sterling has entered the correction phase amid the Conservative party victory. At the moment, the pound/dollar pair is trading below the resistance level at 1.3380. However, the pair may resume its downward movement and hit the 1.3265 level, in case of strong data on the US manufacturing PMI. This is how InstaForex Group analysts see the markets. You can find more information in our next videos. See you later!

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