FX.co ★ Rishi Sunak started talking about curtailing support measures – the pound reacted with growth. German business confidence data provided only temporary support for the euro

The British pound continues to strengthen its position against the US dollar and there are several reasons for this: excellent data on retail sales in the UK supported the upward trend formed yesterday for the pound. The speech by Finance Minister Rishi Sunak was also on the side of traders waiting for any signals about the curtailment of emergency support measures from the Bank of England. Let's deal with all this.

Rishi Sunak, the UK's Finance minister, made a speech today, saying he would do less to boost consumption as the UK emerges from its third lockdown with a good performance. The first two exits from the strict isolation last year were more difficult, while during the third wave of quarantine, many companies and businesses managed to adapt to the realities, which allowed them to survive the lockdown almost painlessly. "From our experience, and the experience of other countries, we are now sure: as soon as everything returns to the usual rhythm of life for people, they start doing what they do best - spending money, walking and having fun," Sunak said in an interview with iNHouse Communications on Friday. Sunak also noted that the mode of operation is likely to change after the pandemic and will be combined with a more "hybrid" approach.

There is absolute truth in Sunak's words, as today's report from the Office for National Statistics ONS of the UK showed: retail sales in the UK recovered in February this year, even despite the continuation of quarantine and isolation measures. The growth was due to sales of non-food products. According to the report, the volume of retail sales, including automotive fuel, increased by 2.1% in February 2021, after a sharp decline of 8.2% in January. The data coincided with economists' forecasts. Excluding motor fuel, retail sales rose 2.4% from the previous month. On an annualized basis, sales fell at a slower pace of 3.7% after a 5.9% decline in January.

As for the technical picture of the GBPUSD pair, it has not changed much compared to the previous forecast, except that the bulls came close to the resistance at the base of the 38th figure. A break in this range will strengthen the upward correction to the area of the maximum of 1.3850, and the more distant target will be the area of 1.3915. We can say that the pressure on the British pound has returned, provided that the bears take control of the support of 1.3730. Its breakdown will lead to a larger movement of the trading instrument down to the area of 1.3670.

EUR

Following Angela Merkel's decision not to impose a quarantine regime during the Easter holidays, the Robert Koch Institute for Infectious Diseases warned that there could be up to 100,000 new cases of coronavirus a day in Germany if the spread is not stopped soon. More recently, the authorities announced that they are adding France to the list of countries with a high-risk zone of COVID-19. According to Angela Merkel, Berlin may tighten border controls and require mandatory quarantine for entry into the country. This is one of Germany's forced measures after the authorities rejected the plan proposed by Merkel under public pressure.

Today, there was also news that the European Medicines Agency plans to issue permits to two factories that will be engaged in the production of a vaccine against coronavirus. We are talking about factories located in the Netherlands and Germany. The Dutch Halix plant, located in Leiden, may start producing a vaccine from AstraZeneca Plc, so unloved in Europe. Thus, the European Commission plans to increase the rate of vaccination of the EU population.

In terms of fundamental statistics, German business confidence improved more than expected in March 2021. The Ifo Institute report shows that the business confidence index rose to 96.6 points in March from 92.7 points in February. The assessment of current conditions, as well as expectations in March, also jumped compared to the previous month. The conditions index rose to 93.0 points, against the forecast of 91.3 points. The indicator of future expectations in March rose and jumped to 100.4 points. However, the reaction to the data was quite limited, and after a slight strengthening of risky assets, the enthusiasm of traders ended. This is because the increase in the number of infections in various countries of the eurozone, including Germany, will necessarily harm the future assessment of the index.

Data on consumer confidence in Italy in March of this year did not significantly affect the market. The report of the Istat statistics bureau said: the consumer confidence index fell to 100.9 points in March from 101.4 points in February, while economists had expected the index at 100.7 points.

As for the technical picture of the EURUSD pair, the growth was limited in the area of the base of the 18th figure. Now the target is the level of 1.1760, the breakout of which in the second half of the day will increase the pressure on risky assets, which will open a direct road to the area of the lows of 1.1715 and 1.1680. It will be possible to talk about the implementation of the bulls' plans to build an upward correction only after the breakout of the resistance of 1.1802 occurs – this is a direct path to the highs of 1.1850 and 1.1930.