FX.co ★ 01.12.2020: EUR and GBP may suffer downward correction. Outlook for EUR/USD and GBP/USD.

The pound sterling began losing in value just after Boris Johnson’s announcement. He said that it was necessary to close all bars and restaurants. However, at the beginning of the day, both the euro and the pound sterling showed a confident rise. Recently, there was plenty of positive news about the coronavirus vaccines that are almost ready to be distributed. However, despite this fact countries will hardly loosen the imposed restrictive measures. Thus, the UK may announce a partial lockdown in the near future. Against this background, the pound sterling fell even amid quite strong macroeconomic data. According to final estimates, business activity in the UK’s manufacturing sector advanced to 55.6 points from 53.7 points. The preliminary data showed an increase just to 55.2 points. In other words, the real figures exceeded the forecasts. In the eurozone, manufacturing MPI dropped to 53.8 points from 54.8 points. Economists had expected a decline to 53.6 points. Thus, the real data beat the forecast. The eurozone inflation report is the most important event of the day. The report revealed that consumer prices showed the same drop as in the previous period. It means that the eurozone inflation has been falling for four months in a row. Moreover, economists had foreseen a slowdown to -0.2% from -0.3%. However, the data failed to meet the forecast. Thus, investors have strong reasons for concern. Such weak figures may force the ECB to extend its stimulus program. It means that the regulator may continue its monetary policy easing. There is no wonder that after the publication of the report, the euro began losing in value. Later today, the US will also report on its business activity in the manufacturing sector. Judging by Europe’s figures, the US manufacturing PMI may also exceed the forecast. This, in turn, will lead to the US dollar appreciation. After a confident climb, the euro/dollar pair managed to hit the psychological level of 1.2000. After that it stopped and slid. However, the price stopped falling at the level of 1.1920. As a result, traders began opening long positions from this level. It is quite possible that the resistance level of 1.2000 will exert pressure on buyers. That is why the number of buy deals may decline. However, if the price consolidates above the psychological level of 1.2000 on the daily chart, the market situation may change significantly. At the same time, the pound/dollar pair reached the upper limit of the range of 1.3300/1.3400. After that it immediately dropped. If the price fixes below 1.3350, it may slide to 1.3300. However, the main changes will take place, if the price breaks (1.3400) either of the limit of the range.

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