The European currency ignored data on manufacturing activity in the eurozone countries, which indicated the prospects for the recovery of the European economy in early 2021. However, the planned meeting of German Chancellor Angela Merkel with the heads of pharmaceutical companies once again reminded investors about the problems that EU countries face when vaccinating the population. The problem is the lack of the vaccine itself. The meeting will be held between Merkel, the leadership of pharmaceutical companies, and representatives of the European Commission.
Following last week's criticism of European pharmaceutical companies, AstraZeneca Plc said it would deliver about 9 million additional doses of the vaccine to the European Union in the first quarter of 2021. Bayer AG also agreed to produce an experimental vaccine against the CureVac NV coronavirus to speed up its release. At the moment, the CureVac NV vaccine is undergoing expanded clinical trials.
Meanwhile, the mood of European investors was also dampened by data on retail sales in Germany, which fell sharply in December 2020 due to restrictions imposed to combat the coronavirus. According to Destatis, retail sales declined 9.6% month-on-month in December after rising 1.1% in November. Economists had forecast a 2.6% decline in sales. Year-on-year retail sales growth slowed to 1.5% from 5% in November. If we take the report in more detail, sales of food and beverages increased by 6.3%, while sales of non-food products fell by 1.5%.
It is unlikely that the data on the unemployment rate will be of serious importance in the near future, however, this indicator should not be ignored. Today's report from Eurostat shows that despite the restrictions imposed to contain COVID-19, the unemployment rate in the euro area remained unchanged at 8.3% in December. The number of unemployed people has increased by 55 thousand since November, and about 13.671 million people were out of work in December. In Italy, the unemployment rate rose to 9% in December from a downwardly revised 8.8% in November.
The above report shows once again the extent to which government policies have protected jobs during the pandemic. The support is expected to continue, so there should be no problems with this indicator in 2021.
As for the report on manufacturing activity in the euro area, it grew more in January than previously expected. So, the index of managers in the manufacturing sector of the eurozone for January was revised to 54.8 points against 55.2 points in December. Let me remind you that a value above 50 indicates an increase in activity. However, despite the growth, the current blocking measures do not allow industrial production to show more active signs of growth, which were observed before the crisis.
In Germany, the January purchasing managers' index from IHS Markit continued to signal a further increase in production thanks to an increase in new orders. So, the index was 57.1 points in January against 58.3 points in December 2020. However, the risk of supply disruptions and delays creates some excitement. Manufacturers of products due to failures in the supply chain do not have time to meet the growing demand for productive resources.
In the same Italy, the manufacturing sector showed good performance on the threshold of 2021. According to IHS Markit, the January PMI index was 55.1 points compared to 52.8 points in December.
As for the technical picture of the EURUSD pair, despite the fall of the euro in the first half of the day, nothing out of the ordinary happened. The bears are still counting on a breakout of the support level of 1.2050, however, the bulls should now think about how to regain control of the market, climbing above the middle of the side channel of 1.2100, which they missed today. It will be possible to talk about the resumption of the bull market in the trading instrument only after the breakdown of the resistance of 1.2140 occurs, which will open a direct prospect for the highs of 1.2180 and 1.2130.
GBP
The British pound, meanwhile, did not manage to get out of the annual highs, although all the prerequisites for this were there. Buyers attempted to break through the resistance of 1.2150, which has been getting on their nerves for quite a long time, but it was again unsuccessful. One good report on the growth of the January UK manufacturing purchasing managers' index was not enough for the bulls to confidently break above the annual highs.
According to IHS Markit and CIPS, the index in December was at the level of 54.1 points against the initial estimate of 52.9 points. Let me remind you that a value above 50 indicates an increase in activity in the sector. There is a risk that after Brexit, disruptions in supply chains will cause a lot of problems, and this will lead to lower exports and higher costs. To all this, we can add more stringent restrictions due to COVID-19, which paints a less rosy picture at the beginning of this year.
Data on the number of mortgage loans allowed in the UK did not particularly worry the market. Today's report says that the number of mortgages approved in December 2020 fell to 103,400 from 105,300 in November. The recent increase in the number of permits offset the significant weakness seen last year. The volume of mortgage loans issued remained at 5.6 billion pounds in December against 5.7 billion pounds in November. The availability of consumer credit remained weak. According to the Bank of England, in 2020, loans to individuals amounted to 16.6 billion pounds.
