There is a rising conflict and tension between London and Brussels every day. Currently, the EU is seriously discussing the issue of the so-called "vaccine embargo". This means the implementation of a ban on the supply of vaccines to the United Kingdom. The fact is that the largest plant that produces the AstraZeneca vaccine is located in Belgium. So, when the countries of the European Union signed contracts to purchase the vaccine, there was a clear demand that the vaccine from the Belgian plant should go to the European Union area. It should be recalled that problems began to arise with the supply of vaccines in Europe after that, since it turned out that the vaccine was going to the UK as a priority. It was an understatement to say that this has greatly angered the Brussels bureaucracy. Some politicians were furious. It is strange, but what is more strange is the thing that happened after that – the temporary refusal to use the AstraZeneca vaccine.
Overall, the conflict between the former partners in the European Union are only increasing. However, there was hardly a reaction from the market. Technically, all this strong story about the possible ban on the supply of vaccines to the UK, caused a stagnation on the pound sterling. In turn, the euro gradually strengthened, albeit not much.
Today, the United Kingdom will release its labor market report, which is expected to be quite good. It is possible that wages may increase, even though the unemployment rate should be the same. The growth rate of average wages is expected to rise from 4.1% to 4.3%. And if we count the overtime and bonuses, then from 4.7% to 4.8%. This means that consumer activity in the UK has a good potential to rise, contrary to Europe and the US, where this very activity is only declining.
However, the British statistics on the labor market, with the beginning of the coronavirus pandemic, raises a lot of questions. For instance, employment is forecasted to decline by 140 thousand. It is quite unbelievable that with such a reduction in employment, the unemployment rate will remain unchanged. Meanwhile, the number of applications for unemployment benefits should be reduced by 17 thousand. In theory, if employment declines, the number of applications should increase. But what we are seeing is the contrary. At the same time, the number of applications has been declining for two consecutive months, while employment has been also doing so for nine consecutive months. In general, there are quite a lot of questions, and they will clearly restrain the growth potential of the pound. Nevertheless, the growth of wages with the unchanged unemployment rate seems extremely pleasing.
Employment Change (UK):
In general, it seems that European currencies will slowly further strengthen today. The US dollar, in turn, has simply nothing to grow from, since sales of new homes may decline by 5.0%, which is quite a lot. In absolute terms, sales should fall from 923 thousand to 890 thousand. Another thing is that the indicator itself is not so significant with no great impact on the market. But if there is nothing else, then there is no reason for the US dollar to rise.
New Home Sales (United States):
The Euro currency showed a local upward interest within the range of 1.1875-1.1945 yesterday, eventually stopping. This led to a stagnation below the level of 1.1945. We can assume that market participants will continue to move within the level of 1.1945, but to be able to close the amplitude cycle, it is necessary for the quote to hold above the 1.1950 mark in the H4 chart.
The GBP/USD pair showed an even more restrained market interest with a flat at 1.3816/1.3875. Under the circumstances, it is possible to break through a particular border of the range.
