Eurozone – German Preliminary Consumer Price Index (CPI)
Today, the Destatis will release the month-over-month German Preliminary CPI, which measures the change sin the price of goods and services bought by German consumers over the past month.
Since the German central bank primarily uses the CPI to measure inflation, it has profound impact on the German economy. Moreover, as the German economy makes up a large portion of the overall Eurozone economic activity, the German CPI also influences the valuation of the Euro against other major currencies. Hence, binary options traders consider the German Preliminary CPI to be a leading indicator of the Euro.
On June 1, the last German preliminary CPI (m/m) indicated that there was a 0.1% increase in price and the forecast for June 29 is that there would be an additional 0.1% increase in the price level over the past month.
United Kingdom – Net Lending to Individuals
At GMT 8:30 a.m., the Bank of England will release the month-over-month net lending to indiividuals figure, which measures the changes in the total value of new credit issued to consumers in the past month.
Since consumer spending is highly correlated with consumer credit, the net lending to individuals figure can indicate future consumer spending as well as consumer confidence in the economy. This is because people only take on debt when they feel financially secure about future incomes.
On June 2, the last net lending to individuals figure came out at $2.9 billion and the forecast for today is set at an increase to $3.3 billion.
Trade Recommendation for the EUR/GBP
Since the formation of a bearish pin bar on December 16, 2014, the EUR/GBP has been trending downwards and formed a well-respected downtrend line in the process.
On June 9, the EUR/GBP price tested this downtrend line and formed another bearish pin bar, which pushed the price towards the resistance zone around 0.7050 over the last few weeks.
As the possibility of a Greek debt default has become a very possible in the next few days, on Monday, the price of the EUR/GBP opened with a gap, below the 0.7050 level.
However, since the start of the week, the EUR/GBP price has retraced towards the 0.7050 level in the last few hours.
As the UK’s Net Lending to Individuals figure is expected increase over the last month, the fundamental outlook for the EUR/GBP is currently bearish. Also, the possibility of a Greek default will create additional bearish pressure on the pair.
Under the circumstances, it is recommended that traders consider placing a PUT order with their binary options brokers for the EUR/GBP, as the price has already penetrated the strong support around the 0.7050 level.
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