Eurozone

The euro continues to be under pressure, losing support in the euro area amid escalating trade contradictions between the US and Europe.

According to preliminary data, the GDP growth in the 1st quarter was 0.4%, which is lower than a quarter earlier. It slowed down to 2.5% against 2.7% year on year, which has been the lowest growth rate of the economy from 2 sq. Km. 2014. This may indicate the exhaustion of the potential of the asset repurchase program that the ECB has been carrying out in the last three years.

Today, the Eurostat will publish preliminary data on consumer inflation in April with a negative outlook as the price growth is expected to slow to 0.9% against 1.0% in March. Slowing inflation is not unexpected for the markets, as a number of countries, and Germany in particular, have already reported both a slowdown in price growth and a decrease in retail sales. Given the decline in business activity indices in the last couple of months, looks quite a logical consequence.

On Wednesday, the head of the Bundesbank Weidmann said that the markets should proceed from the fact that the first rate increase will not be very soon, and certainly not earlier than in the second half of 2019. The ECB may announce the beginning of the period of the rate hike after it completes the asset repurchase program which means it can evade the specifics for at least six months that does not add enthusiasm to the bulls.

The euro will be under pressure until the end of the week and finally, it fixed below 1.20. The immediate goal is the support level of 1.1914. Given the expectations of the results of the negotiations between the US and China, it may fall in the near future.

United Kingdom

The pound continues to fall amid a number of reasons, both macroeconomic and political. Business activity is slowing down as the manufacturing sector for the month of April showed the worst result in 17 months, according to Markit.

The Bank of England notes a slowdown in consumer and mortgage lending, which indirectly indicates a drop in real incomes. The index of retail prices from BRC fell again by 1% in March as a month earlier. The only activity in the construction sector slightly increased after a long fall.

Markedly shaken by the position of Theresa May, the British Parliament demands to abandon plans to synchronize customs duties with the EU after Brexit, since such a step will reduce the variability in the conclusion of any important agreements in the future. The form in which the parliament presented, the objections strikingly resembles an ultimatum, which indirectly reflects discontent including a number of foreign policy initiatives.

The pound will remain under pressure until the end of the week, as the probability of an increase in the rate at the meeting of the Bank of England on May 10 fell slightly. The pound has already fallen below the 200-day average, which is a serious sign of a change in the trend from bullish to bullish. There is virtually no reason to grow. Any possible growth will be corrective and limited to 1.3715. A decrease to 1.35 and an attempt to gain a foothold below this level are more likely to happen.

Oil

Chances for continued growth in oil quotations continue to remain high. The next aggravation of political tension pushes prices up. This time, the driver is the situation around Iran, as the US is actively trying to convince the markets that they are preparing to exit the nuclear agreement.

Iran has made it clear that without the US, the agreement will not operate. It means that the risk of escalating tensions in the Middle East is growing.

The OPEC + countries continue to decline production, which also contributes to a decline in global reserves. he markets clearly see the inability of the US to influence this process. According to the IEA, achieving the balance is possible in May, and therefore, the June meeting of OPEC + will prove crucial for the oil market. Data on stocks in the US markets are already ignored, testing at $76/bbl. For Brent, it could take place on Friday.