Released in the first half of the day, data on the growth rate of the German economy exerted pressure on the euro, which continued to decline in pair with the US dollar.
According to the report of the statistics agency, Germany's economic growth for the second quarter of this year slowed down following a larger than expected growth in the first quarter. Thus, Germany's GDP in the second quarter compared to the first quarter grew by 0.6%. In annual terms, the growth was at 2.5%. Economists predicted that the year-on-year growth will be 2.8%. However, compared to the first quarter, the growth should have been stronger and should have amounted to 0.7%.
The slowdown in the growth rate of Germany's economy is a very alarming call for the European Central Bank.
In the second half of the day, the US dollar continued its strengthening versus the euro and the British pound against the background of excellent data on retail sales in the US.
According to the US Department of Commerce, retail sales in the US for the month of July this year were much better than economists' forecasts, showing an increase of 0.6% with sales increase expectations of only 0.4%. Retail sales, excluding cars in the US, for the month of July rose by 0.5%.
As for the technical picture of the EURUSD pair, the breakthrough of the large support level of 1.1720 will lead to a further sell-off of the euro with the update of the low from August 9 to 1.1690 and a new reduction target to 1.1650.
The British pound collapsed in the morning against the US dollar after the release of data indicating a decline in UK inflation.
According to the statistics agency, the UK consumer price index in July this year increased by 2.6% compared with July last year. Economists expected that inflation will be at 2.7%.
Compared to June, the consumer price index fell by 0.1%. Economist expected that it would remain unchanged. Most likely, the recent strengthening of the British pound was reflected in the level of inflation which rose sharply after the referendum on Brexit against the background of the weakening national currency. Now, the Bank of England cannot count on such a way to increase inflation. Therefore, if the consumer price index continues to decline further, the scenario for raising interest rates may be postponed for a longer time. This will negatively affect the quotations of the pound.
Core inflation, which does not take into account the volatile categories of goods, did not change in July this year compared with June, amounting to 2.4%.
As for the technical picture, so far only the sales of the pound can significantly decrease when the support levels of 1.2850 and 1.2815 are reached.