The US dollar failed to extend gains during the European session. The EUR/USD pair continues to advance. The speech of ECB President Mario Draghi at the press conference encouraged traders to buy the euro. Draghi did not mention the ECB monetary policy, but he noted the stable growth of the eurozone economy. Yesterday’s statements of Mario Draghi helped the US dollar to strengthen, but now the greenback is retreating from the reached highs. Market participants take a wait and see approach ahead of the today’s release of the US GDP data. If forecasts suggest an economic slowdown, then the euro and the pound will consolidate at the current levels. Otherwise, the euro will fail to 1.2375 and the pound to 1.4125.
Meanwhile, the British national currency attracted market participants after the speech of Bank of England President Mark Carney at the economic forum in Davos. The Bank of England President raised the issue of Brexit, pointing out that the UK economy will lose about 10 billion pounds. Theresa May also commented on the UK withdrawal from the European Union. In particular, she highlighted the start of new trade relations. Investors started to worry about the consequences of Brexit again. As a result, the GBP/USD pair almost touched the level of 1.41. However, the trend has changed again, so the UK currency returned to 1.42.
The British pound grew in demand amid the publication of preliminary data on the UK GDP which surpassed market expectations. On a year on year basis, the British economy expanded by 1.5% in the 4th quarter, beating analysts forecast of a 1.4% increase. In the previous reporting period, the GDP growth rate was 1.7%. Quarter on quarter, the country’s economy grew by 0.5% after a 0.4% increase in the third quarter. Economists had expected the rate to remain unchanged.
Now, according to analysts, everything depends on the release of important macroeconomic data from the US. However, currency strategists expect the euro and the pound to close this trading week in positive territory against the US dollar.
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