The euro fell slightly after data showed that industrial production in the euro zone declined more than expected in December. However, buyers immediately activated in the area of important support levels and did not allow a larger downward movement to be formed.
According to the report, industrial production in the eurozone in December 2018 declined immediately by 0.9% compared with November, while the interviewed economists expected a reduction of 0.3% only. Such weak indicators once again confirm the fact of more than a serious slowdown in the economy at the past and at the beginning of this year.
In the afternoon, there was data on inflation in the United States. Despite the weak report, the US dollar regained some of the positions that was lost yesterday which was paired with the euro.
According to a report by the US Department of Commerce, consumer prices in the United States in January 2019 remained unchanged in comparison with the previous month, while economists had expected an increase of 0.1%. The base consumer price index, which does not take into account volatile categories, including energy, rose by 0.2% compared with December. Economists had expected the base index to rise by 0.2% in January as well. As compared with the same period of the previous year, prices rose by 1.6% in January, yet it is not enough for the Federal Reserve's target level. Base prices, on the other hand, rose by 2.2% compared with January 2018.
The British pound fell immediately after data released indicating that the rate of consumer price inflation in the UK slowed down and was beneath the target level set by the Bank of England.
The main reason for such a sharp decrease was the fall in energy prices at the end of last year.
According to the data, the consumer price index CPI UK in January 2019 increased by 1.8% compared with January 2017 and an increase of 2.1% back in December. The basic level of the Bank of England is around 2%.
The base index, which excludes volatile categories, but includes food, tobacco products, and energy, rose 1.9% in January, as well as in December.
Bear in mind that quite recently, the Bank of England announced that they were not refusing further increases in interest rates. However, given these indicators, it is unlikely that anyone will hurry to tighten monetary policy unnecessarily in the future, which may weaken the position of the British pound, and which will be eliminated under pressure due to the uncertain Brexit scenario and slowdown in the British economy.
As for the technical picture of the GBP / USD pair, yesterday's upward correction, which was observed in the second half of the day, may continue today. However, this requires breaking through the important resistance levels of 1.2920 and 1.2980.
The material has been provided by InstaForex Company - www.instaforex.com