EURUSD and GBPUSD: PMI manufacturing indices put pressure on the eurozone economic growth. UK construction activity declines

Trading 05 nov 2019 Donner votre avis

Released in the first half of the day, the indices of procurement managers for the manufacturing sector of the eurozone countries once again pointed to the continuing problems in the economy that continue to emerge amid the slowdown in global growth and the trade war conducted by the US White House administration against developed countries, which leads to a reduction in export and lower orders from abroad. The ongoing political uncertainty also puts strong pressure on the performance of the eurozone manufacturing sector.

According to IHS Markit, the Purchasing Managers Index (PMI) for Spain's manufacturing sector fell to 46.8 points in October from 47.7 points in September.

A similar index for the manufacturing sector in Italy fell to 47.7 points in October against 47.8 points in September. Economists had forecast the index at 47.5 points.

France is the only country where activity in the manufacturing sector shows at least some minimal growth. After the start of slight growth in the summer months, according to IHS Markit, the PMI for purchasing managers for the manufacturing sector in France continued to strengthen in October this year, to 50.7 points from 50.1 points in September. Economists had expected the index to be 50.5 points.

Things are the worst in Germany. Export problems and a sharp drop in new orders are the main problems of the manufacturing sector, which has continued to decline since January this year. According to the data, the PMI for Germany's manufacturing sector marginally grew to 42.1 points in October from 41.7 points in September, which does not play any role in the situation as a whole. Economists predicted an increase in the index to 41.9 points.

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It is not surprising that the PMI for the manufacturing sector of the eurozone rose only to 45.9 points in October against 45.7 points in September. An index below 50 points indicates a decrease in activity.

As for the technical picture of the EURUSD pair, after the unsuccessful attempt of the bears to push support to 1.1150, the excitement of sellers sharply fell, which left the trading instrument in a narrow side channel. Bulls still have problems with the level of 1.1180. Only a breakthrough of this high will increase the demand for risky assets and open a direct path to the 12th figure. The target will be levels 1.1230 and 1.1270. Another bullish setback could seriously put pressure on the euro. In this case, support can be expected in the region of a low of 1.1130 or at a larger level of 1.1080, which was formed at the end of last week.

GBPUSD

The British pound slightly fell after data showed that activity in the UK construction sector continued to decline for the sixth consecutive month in October 2019. The main pressure is associated with political uncertainty, which weakened demand. According to the data, the PMI for the construction sector rose to 44.2 points in October from 43.3 points in September, but remained below the level of 50, which indicates a decrease in activity.

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Regarding the current technical picture of the GBPUSD pair, a break of support of 1.2915 may increase pressure on the pound, which has long been ready for a downward correction of the field of rapid strengthening last month amid growing expectations for a Brexit deal. Now all focus will be on the political race and general elections to be held in the UK in December this year.

As quite large support levels, we can consider areas 1.2870 and 1.2800. Their breakthrough will put pressure on the pair and push it to the lows of 1.2730 and 1.2660. To return demand for the pound, bulls need a breakthrough and consolidation above the high of the last month at 1.3020.

The material has been provided by InstaForex Company - www.instaforex.com

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