Let's all get up and applaud Boris Johnson. He really deserves the highest praise and honors, since in the current situation, the Conservatives were able to do, probably, the impossible under his leadership. The Conservative Party did not only won the early parliamentary elections, but gained more than half of the seats in the House of Commons. From now on, Boris Johnson does not need to seek the support of other parties and take into account their opinion on certain issues, especially regarding Brexit, as Conservatives can take any decisions individually. And frankly, the result is somewhat unexpected. In addition, there is nothing surprising in the fact that the pound immediately rushed to the maximum value over the past year and a half. After all, there are immediately two extremely important points. Confident victory of Conservatives means the end of the epic with Brexit and the removal of all kinds of questions. Now, Great Britain should leave the European Union already at the end of January next year. Although the decision is controversial, at least the business now has a clear understanding of what to prepare for. The less uncertainty, the better for the business. Another extremely important point is that the Conservative Party traditionally pursues a policy that suits large investors, and the strengthening of its position in the House of Commons is perceived as an extremely positive factor for business. Thus, it can be reiterated there is nothing surprising in the rapid growth of the pound. Another curious point is that Boris Johnson may become that rare politician who will fulfill his campaign promises. After all, he now has all the tools for this. After all, his main campaign promise was to finally commit to Brexit.
It is clear that the early parliamentary elections in the UK overshadowed all other events, and no one looked at macroeconomic statistics, which was extremely curious. However, you need to mention first yesterday's board meeting of the European Central Bank. The first is chaired by Christine Lagarde. As expected, it ended in nothing. That is, no changes in monetary policy have occurred. Christine Lagarde also said that the European Central Bank, following the Federal Reserve System, is taking a break in the matter of changing the existing interest rate policy. Despite this, she did not specify for how long. Nevertheless, the fact that the possibility of lowering the refinancing rate is postponed is certainly a positive factor for the single European currency. However, the decline in industrial production in Europe accelerated from -1.8% to -2.2%. The only thing that pleases in this sad fact is that they expected a recession to increase to -2.4%. Thus, the recession is not as deep as predicted. In addition, inflation in Germany remained unchanged at 1.1%, while it accelerated from 0.8% to 1.0% in France. But these data completely coincided with the forecasts.
Industrial Production (Europe):
American statistics turned out to be worse than forecasts, which somehow justifies a weakening dollar. Thus, the growth rate of producer prices remained unchanged, but did not accelerate from 1.1% to 1.2%. This means that the growth potential of inflation is extremely limited. In addition, the total number of applications for unemployment benefits increased by 18 thousand with a forecast of 11 thousand. At the same time, the number of initial applications for unemployment benefits increased by 49 thousand, although they expected an increase of 8 thousand, while the number of repeated applications for unemployment benefits instead of increasing by 1 thousand, decreased by 31 thousand.
Producer Price Index (United States):
It is clear that a slight correction arises, after such a rapid rise in the pound, which also pulled the single European currency. However, no data is published in the UK itself unless you count the final vote count. On the other hand, some serious data is not expected for the euro area. For example, they expect a slowdown in the decline in industrial production from -1.6% to -1.0% in Italy. However, at the same time, the growth rate of production orders by 0.3% should be replaced by a decline of -3.4%. Thus, due to the extremely low importance of published macroeconomic data in the Old World, there is clearly no reason for correction today.
Industrial production (Italy):
Meanwhile, on the other side of the Atlantic, such an occasion will clearly happen, and such an honorable role is assigned to retail sales. The growth rate of which may accelerate from 3.1% to 3.4%. Combined with the recent increase in inflation, this is an incredibly positive factor, as it clearly indicates a growth in company profits, which always pleases investors and shareholders.
Retail Sales (United States):
The single European currency is really seriously overbought, so it is worth waiting for its decline to the area of 1.1100 - 1.1125.
The pound is even more overbought simply because of an overabundance of emotions, and so, it will be more fun to decline. It will gradually sink to the area of 1.3250 - 1.3300.
