On Thursday, the Bank of England surprised markets by holding interest rates, despite hints from Governor Mark Carney that policy easing could be possible made earlier. Economists had expected a rate cut of 25 points to 0.25%, which would have been the first rate change in seven years. Following assumptions appeared after the Brexit referendum on 23 June, when Britons widely vote to leave the European Union. According to the minutes of the meeting, the Bank's Monetary Policy Committee voted by 8-1 to hold rates, as well as hinting that they "expect monetary policy to be loosened in August". Moreover, the BoE announced in its policy statement that they would give another month to evaluate the Brexit's impact on the economy and probably would raise stimulus measures in August. Currently, the bank's benchmark rate equals 0.5%. Following decision is widely appreciated by economists, since many experts are saying the Bank made the right decision by leaving interest rates unchanged. In the meantime, the Pound advanced while shares, in turn, dropped after the Bank of England unexpected decision. The Cable added around 1.4%, or two cents, versus the dollar reaching $1.3326.
Euro zone industrial production markedly worsened and even missed estimates in May, giving back almost all of the gains recorded the previous month in a fresh indication that an economic recovery which is now in its fourth year remains modest and vulnerable to new setbacks. According to the European Union's statistical office Eurostat, output in manufacturing, mining and utilities in the 19-nation bloc rose 0.5% year-on-year during the fifth month of the year, down from the 2.0% upturn seen previously. Analysts anticipated a deceleration to 1.4% growth in May. Industrial production across the 19 countries that share the euro has been highly volatile over recent months, jumping in some and slumping in others. Moreover, the indications for the second quarter are not encouraging, and consistent with other signs that growth was slowing even before the U.K. voted to leave the European Union on June 23, creating a period of uncertainty that the European Central Bank expects will slow the recovery. Many economists estimate the Euro zone economy slowed during the three-months to June, growing by between 0.3% and 0.4% after recording an expansion of 0.6% in the first quarter. However, a further slowdown seems likely over coming months.
Upcoming fundamentals: German Buba and US data
As it is very common on Monday, it is a quiet day regarding the financial market affecting data releases. In Europe the only notable data to watch is the German Buba Monthly Report or the German Bundesbank's regular monthly report at 10:00 GMT. Afterwards, data from the US will affect the EUR/USD pair, as NAHB Housing Market Index will be released at 14:00 GMT. In the evening, the Long-term TIC NET and Total TIC Net for May will be published at 20:00 GMT.
EUR/USD falls to 1.1028 on Friday
Daily chart: The Euro surged against the US Dollar for the four upcoming session before Friday, as the currency exchange rate had gradually climbed from 1.1044 to 1.1116. However, on Friday after an initial surge the pair fell from the reached high to 1.1028, which this month new low. Although, on Monday, the exchange rate started day's trading at 1.1044, and it has climbed to 1.1065 by 5:00 GMT. At the moment, the pair is just below the newly established weekly PP at 1.1070, and it is most likely to struggle with it, as the pivot point provides resistance.SWFX traders bearish on Monday
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade at 1.11 by September
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between June 18 and July 18 expect, on average, the currency pair around 1.11 by the end of September. Though 62% of participants believe the exchange rate will be generally below 1.12 in ninety days, with 40% (+1%) alone seeing it below 1.08. Alongside, only 25% (+1%) of those surveyed reckon the price will trade in the range between 1.12 and 1.18 on September 30.