The euro remained range-bound against the pound yesterday following the release of slightly better-than-anticipated economic data from both the UK and Germany. While the German Ifo business climate index data for September beat estimates, the UK CBI realized sales data for the same period surpassed expectations. Overall, the EUR/GBP pair traded in a narrow range of between 0.8670 and 0.8702 in the past 24 hours.
According to the data published by the German Ifo Institute, the country’s business climate index inched lower to 85.70 in September from 85.80 in August but was slightly better than forecasts of 85.10.
Also, the current scenario index declined to 88.70 in September from 89. The reading indicates a further decline in firms’ satisfaction with the prevailing business scenario. However, the expectations scenario improved, with the corresponding index inching higher to 82.90 from 82.70.
The business climate index, representing the manufacturing sector, slightly rose to -16.40 from -16.60. Nevertheless, expectations have been downwardly amended to reflect increased pessimism. The order backlog has been on a decline but is not as robust as earlier.
The services sector index declined to -5 from -4. This is the sixth successive decline in a row. Additionally, the current situation has also recorded a considerable deterioration. Sales were weaker compared to earlier months. Nevertheless, expectations rose slightly, but poll participants expressed skepticism.
The trading index improved to -25 from -25.60. Nevertheless, traders were not satisfied with the prevailing business scenario.
The construction sector index fell to -31.30 from -29.80. The reported figure reflects the lowest level since January 2009. Businesses have expressed a dim view of their present economic conditions, with many indicating an even more unfavorable assessment than before. Furthermore, the outlook for the forthcoming months continues to be marked by a pervasive sense of pessimism.
According to the Confederation of British Industry, the UK’s retail sales volumes declined at a slower pace of -14% in September, following a dip of -44% in the year to August. Economists had anticipated a decrease of 33%. The reading reflects the fifth successive month of decline.
For October, retailers forecast sales volumes to dip at a much slower pace of -8%.
Likewise, retail inventories eased slightly but continued to stay at a higher level compared to sales, at 6% in September. In August, retail inventories were 15% higher compared with expected sales. Retailers anticipate stock positions to be 3% higher than anticipated sales in October.
Orders placed with suppliers declined 19% in September, compared with a decrease of 37% in August. Retailers anticipate cutting orders by 15% in October.
Internet sales volumes declined by 3% in the year to September. In October, internet sales volumes are expected to plunge by 36%.
The slightly better economic data is expected to keep the EUR/GBP pair range-bound in the short term.
Technically, the EUR/GBP pair is rising after consolidating at 0.8540. The next major resistance is anticipated to be only near 0.8815. Additionally, the currency pair is trading above its 50-day moving average, while the stochastic indicator is in the bullish zone. Therefore, we anticipate the EUR/GBP pair to remain in an uptrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
