German Ifo Weakens as EURGBP heads to T1

EURGBP, Daily              

German Ifo reading unexpectedly drops in January. The headline reading fell to just 109.8 from 111.0 in the previous month, the lowest number since September. The decline was driven largely by a huge drop in expectations reading, which fell back to 103.2, the lowest since August and down from 105.5 in December. The current conditions indicator improved slightly to 116.9 from 116.7 in December. The breakdown showed that contrary to the improvement in the manufacturing PMI yesterday (January 24), the manufacturing reading in the Ifo actually declined, although this was in a broader downmove across all sectors. The overall reading still remains at high levels, consistent with ongoing growth, but at least the Ifo suggests that growth dynamics have slowed down somewhat at the start of the year.

The EUR came under pressure following the data and was also undermined by the ECB’s Lautenschlaeger who urged talks on “real” QE tapering. The German Executive Board member said “all preconditions for a stable rise in inflation exist”, adding that she is optimistic therefore “that we can soon turn to the question of an exit”. Draghi has stressed that the planned reduction in QE purchase volumes from April do not amount to “real” tapering, as they are not part of a planned exit strategy. Lautenschlaeger’s comments meanwhile urge the start of at least talks about a gradual winding down of asset purchases. She stressed that while current inflation is mainly driven by higher energy prices, “that doesn’t mean waiting until the last doubt about the return of inflation has been dispelled. It is rather a matter of not risking a reactio to a temporary inflation spike”.

EURGBP spiked down to 0.85275 within a few pips of my target of 0.85250 from my entry on January 18 at 0.8674.

/ has had a 100% start to 2017 with five trades achieving both Targets 1 and 2 and a sixth trade hitting target 1 for a total net gain of 1218 pips.

Click here to access the HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our latest webinar and get analysis and trading ideas combined with better understanding on how markets work.

Click HERE to register the next webinar will start in:

Stuart Cowell

Market Analyst


Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.