GBPUSD STEADY AS UK BUSINESS ACTIVITY SOARS

The British pound moved sideways on Monday as Prime Minister Johnson is expected to end Covid restrictions in England. The government believes that risks to the population are significantly lower now that most people in the country have received their vaccine shots. The currency also reacted to positive news by Markit about the economy. Data compiled by Markit and CIPS showed that business activity rose at the fastest pace since June last year. The composite PMI jumped to 60.2 in February from 54.2 in January. The key drivers were the services sector, which saw robust confidence as the country ended most of the restrictions.

It was a sea of red in Europe as investors reacted to the current crisis on Ukraine. In a statement today, Washington and Moscow said that Biden and Vladimir Putin had agreed on principle to hold a joint meeting. Antony Blinken, the US secretary of the state and Sergey Lavrov, the Russian foreign minister will hold a meeting to deliberate the key issues. Still, most western governments believe that Russia will ultimately invade Ukraine since it has massed as many as 190,000 troops on Ukraine’s borders. In Germany, the DAX index declined by 1% while in France, the CAC 40 index fell by 1.38%.

The euro retreated slightly after the relatively mixed flash PMI numbers from Europe. According to Markit, the services PMI rose from 51.1 in January to 55.8 in February. This increase was better than the median estimate of 52.0. However, manufacturing activity deteriorated slightly in February as the PMI fell to 58.4. This drop was mostly because of Germany where manufacturers continue facing pressures on costs. These numbers came a few days after the ECB chief economist, Philp Lane, shifted his views on inflation by saying it looks unlikely to move below 2% in the next two years.

EURUSD

The EURUSD pair declined slightly after the mixed PMI data from Europe. The pair is trading at 1.1348, which was significantly lower than the intraday high of 1.1391. On the hourly chart, the pair has moved below the key resistance level at 1.1397. It has moved slightly below the 25-day and 50-day moving averages while the DeMarker oscillator has moved below the overbought level. Therefore, the pair will likely keep falling in the coming days.

USDCHF

The USDCHF pair declined to a low of 0.9160, which was the lowest level since January 26th. On the four-hour chart, the pair has moved below the key support at 0.9175.  It moved to the lower side of the descending channel while the MACD moved below the neutral level. The pair also dropped below the 25-day and 50-day moving averages. Therefore, the path of the least resistance for the pair is to the downside.

EURCHF

The EURCHF pair also declined sharply on Monday. It fell to a low of 1.0915, which was the lowest point on February 3. It has moved sharply lower from last week’s high of 1.0610. On the four-hour chart, the pair moved slightly below the 25-day moving average while the Chaikin oscillator continued its downward trend. Therefore, the pair will likely keep falling this week.