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21.10.2020: EUR and GBP to go on rising? Outlook for EUR/USD and GBP/USD

Today, the US dollar showed a significant drop. Moreover, statistics from the UK has boosted the pound sterling. The UK inflation advanced even more than expected. Thus, the indicator climbed by 0.5% after a rise of 0.2% in the previous period. Economists had forecast a smaller increase of 0.4%. Thus, the already growing pound sterling has received additional support. Notably, the euro is also gaining in value. Moreover, the European Union has announced that it is ready to make new concessions and guarantees that the UK economic sovereignty will not be violated. All these decisions were made to resume the trade negotiations as soon as possible. The fact is that on November 15, both sides should present the final version of the agreement. It is quite possible that in the near future, there will be only positive news on the issue. Yesterday, the euro/dollar pair resumed rising and broke the local high of 1.1830 logged on October 9. On the trading chart, we can see that the quote touched the stagnation area of September 10-18. As a result, the price jumped above the level of 1.1850. This may lead to a drop in the number of long positions. That is why there are two possible scenarios. According to the first one, the euro/dollar pair may slow down between the levels of 1.1850 and 1.1900. In this case, the pair may show a drop. According to the second scenario, the price may consolidate above 1.1910 on the four-hour chart. This may change the downward trend that began in September. Let’s take a look at the pound/dollar pair. Yesterday, the pair got stuck. However, today, it is showing quite a high activity. The price consolidated above 1.3000 and approached the high of 1.3062 logged on October 12 and 14. If the pair fails to consolidate above 1.3080 on the four-hour chart, it may decline below 1.3000.

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The UK private sector growth moderated in October reflecting weaker contribution from the service economy due to tighter restrictions across the hospitality sector and the impact of local lockdowns on general consumer spending, flash survey results from IHS Markit showed Friday.The flash IHS Markit/Chartered Institute of Procurement & Supply composite output index declined more-than-expected to 52.9 in October from 56.5 in September. The score was forecast to fall to 55.6.The latest reading pointed to the weakest rise in private sector output since a return to growth was first signaled in July.The services Purchasing Managers' Index fell notably to 52.3 in October from 56.1 a month ago. The score was forecast to drop moderately to 55.0.Similarly, the manufacturing PMI came in at 53.3 versus 54.1 in the previous month. The reading was forecast to drop to 53.1.James Smith, an ING economist said the October PMIs are the latest indicator to suggest the UK's economic rebound is running out of steam. Monthly GDP is expected to contract this month and that makes further Bank of England stimulus highly likely in November, the economist said.Duncan Brock, Group Director at CIPS, said "Fears over inherent weaknesses in the UK economy materialised this month with a sudden fall in the overall index showing a sharp drop in new orders and a continuing erosion of employment opportunities.""With more lockdowns, Brexit within touching distance and new government support at weaker levels than when the pandemic hit, it is clear businesses will have figure out their own survival tactics as the economy heads back towards square one."The survey showed that total new business volumes across the UK private sector decreased in October, ending a three-month period of expansion.October data showed a steep fall in employment numbers, with another month of deep job cuts signaled in both the manufacturing and service sectors.Business expectations for the next twelve months eased again in October and the degree of confidence was the lowest since May.The material has been provided by InstaForex Company - www.instaforex.com
Belgium business confidence improved in October, defying expectations for a weakening, survey data from the National Bank of Belgium showed on Friday. The business confidence index climbed to -8.5 from -10.8 in September. Economists had expected a score of -11.5. The survey was conducted between October 1 and 22 and reflects only partly the stricter measures decided on October 16 by the federal government as part of the efforts to tackle the pandemic.Confidence strengthened in the manufacturing industry and, very strongly, in the trade sector. Sentiment stabilized in services and in the building industry.The production capacity utilization rate rose to 76.7 percent in October from 73.3 percent in July.The material has been provided by InstaForex Company - www.instaforex.com
Taiwan's industrial production rose sharply in September and retail sales increased, data from the Ministry of Economic Affairs showed on Friday.Industrial production rose 10.73 percent year-on-year in September, following a 3.60 percent increase in August.Manufacturing output increased 11.32 percent annually in September, following a 4.06 percent rise in the previous month.Production in mining and quarrying gained 21.85 percent. Output of water supply and electricity and gas supply grew 0.95 percent and 4.10 percent, respectively.On a monthly basis, industrial production rose 2.18 percent in September, after a 2.62 percent increase in the preceding month. Data showed that retail sales rose 2.9 percent annually in September, after a 8.17 percent growth in August. This was the third consecutive rise in sales.Wholesale trade grew 8.2 percent in September and sales of food and beverages trade rose 0.3 percent.The material has been provided by InstaForex Company - www.instaforex.com
Taiwan September Retail Sales Up 2.9% Y/Y; Wholesale Sales Grow 8.2% The material has been provided by InstaForex Company - www.instaforex.com
The euro advanced against its major counterparts in the European session on Friday, as Eurozone manufacturing PMI rose more than forecast in October and optimistic comments from House Speaker Nancy Pelosi revived the prospect of another stimulus package. Flash survey data from IHS Markit showed that Eurozone manufacturing output growth accelerated in October at the fastest pace since February 2018.The manufacturing Purchasing Managers' Index rose to a 26-month high of 54.4 from 53.7 a month ago. The score was expected to fall to 53.1.Pelosi said that negotiators were making progress in aid talks and a deal could be reached "pretty soon".But White House economic adviser Larry Kudlow warned that "significant policy differences" remained to craft an acceptable compromise before the election.The final face-off between US President Donald Trump and his Democratic rival Joe Biden appeared civilized and informative than the first chaotic clash. The candidates argued about handling Covid-19 and reopening the country, the economy, health-care reform and immigration in the debate held at Belmont University in Nashville, Tennessee.The euro bounced off to 1.0720 against the franc, from a 1-week low of 1.0702 hit at 9:45 pm ET. The euro is seen finding resistance around the 1.10 mark. After falling to a 3-day low of 1.1787 at 8:30 pm ET, the euro appreciated to 1.1854 against the greenback. The euro may possibly challenge resistance around the 1.20 level. The euro was trading at 123.75 against the yen, up from a 4-day low of 123.41 set at 8:45 pm ET. The euro is likely to test resistance around the 127.5 level, if it continues its rally. The latest survey from Jibun Bank showed that the manufacturing sector in Japan continued to contract in October, albeit at a slower pace, with a manufacturing PMI score of 48.0.That's up 47.7 in September, although it remain beneath the boom-or-bust line of 50 that separates expansion from contraction.The euro was higher against the pound, at a 2-day high of 0.9057. The next possible resistance for the euro is seen around the 0.92 level.Preliminary data from the Office for National Statistics showed that UK retail sales grew for a fifth consecutive month in September and exceeded expectations by a wide margin supported by food and online sales as well as a recovery in non-food sales.The volume of retail sales grew 1.5 percent month-on-month in September, which was much bigger than the 0.4 percent increase economists had forecast.The euro staged a modest recovery against the loonie with the pair trading at 1.5543. This followed a 4-day low of 1.5501 logged in the Asian session. On the upside, 1.58 is possibly seen as its next resistance level.In contrast, the euro weakened to an 8-day low of 1.7663 against the kiwi from Thursday's closing value of 1.7702. The euro is poised to find support around the 1.74 level. Data from Statistics New Zealand showed that consumer prices in New Zealand rose 0.7 percent on quarter in the third quarter of 2020.That was shy of expectations for an increase of 0.9 percent on quarter following the 0.5 percent contraction in the three months prior.The single currency fell back to 1.6555 against the aussie, not far from a 4-day low of 1.6553 seen in the previous session. Next key support for the currency is likely seen around the 1.62 region. The latest survey from IHS Markit showed that the manufacturing sector in Australia continued to expand in October, albeit at a slower pace, with a manufacturing PMI score of 54.2.That's down from 55.4 in September, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.Looking ahead, Markit's U.S. flash composite PMI for October is scheduled for release in the New York session.The material has been provided by InstaForex Company - www.instaforex.com
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