The European currency ignored the data on the French economy, where GDP coincided with the forecasts of economists, but closer to the middle of the European session, the pressure on EURUSD returned after the release of a weak report on the German labor market.
Quite a lot has already been said that the prospects for the German economy are gradually deteriorating, and this was confirmed by a sharp increase in the number of applications for unemployment benefits in May this year, which analysts did not expect.
According to the report of the Federal Employment Agency of Germany, in May of this year, the number of unemployed in Germany increased by 60,000 compared with April. Economists, on the contrary, predicted a decline of 8,000.
Such a sharp increase in new applications occurred after an inspection was conducted of the employment status of people eligible for unemployment benefits. Another 10,000 new applications came from people who recently lost their jobs due to the economic situation in the country.
It did not pass without a trace for the unemployment rate in Germany, which rose to 5.0% in May, after a test of a record high of 4.9% in April of this year. The number of registered vacancies in Germany in May was 792,000.
As noted above, the French GDP data was ignored by the market, since all reports almost coincided with economists' forecasts. According to the data, the French economy in the 1st quarter of this year grew by 0.3% compared to the 4th quarter of 2018. In annual terms, growth was 1.2%.
Consumer spending in France in April showed growth again and turned out to be better than economists' forecasts, which allows concluding that economic growth continued in the 2nd quarter. According to the statistics agency, spending rose by 0.8% in April, while economists had expected a growth of only 0.3% compared with March. As for the same period in 2018, consumer spending increased by 1.2% with a growth forecast of 0.9%.
As for inflation, preliminary data on consumer price growth in France are far from the objectives of the European Central Bank. According to the report, the preliminary CPI in France in May 2019 rose by 0.2% and 1.0% per annum, while the consumer price index was expected to rise in May at the level of 0.2% and 1.1%, respectively. As for the consumer price index harmonized by EU standards, it rose by 1.1% per annum in May compared to 1.5% in April of this year.
Maintaining the growth of inflation in the eurozone is one of the main tasks of the European Central Bank because without reaching the target level in the region of 2.0%, there will be no talk about raising interest rates.
As for the technical picture of the EURUSD pair, the bears continue to push risky assets down to the support area of 1.1140, the breakthrough of which will easily return the trading instrument to the minimum of this month in the area of 1.1110.
As for the British pound, the breakthrough of support 1.2640 did not lead to its big sale. This once again confirms the fact that the major players prefer to stand aside until clarity with the election for the post of British Prime Minister. If the Conservative Party of Great Britain elects its leader as a supporter of hard Brexit, the pound will resume its major downward trend and return to the December minimum around 1.2480. However, the further medium-term downward movement will depend on a parliamentary vote on the subject of Brexit already under the new Prime Minister.
The material has been provided by InstaForex Company - www.instaforex.com