Berlin New Lockdown. Image source: Karl-Heinz Spremberg © 123RF.com
Earlier today, GfK published the October consumer confidence numbers in Germany. According to the findings of the survey, the index has tumbled to -6.7 points from September's -3.2.
The dive in consumer sentiment over the previous month was bigger-than-expected since the final data missed the initial market forecasts for a more moderate depreciation of -4.9 index points.
German Consumer Confidence. Image source: TradingEconomics.com
The news of the downwardly revised consumer confidence comes just days after the publication of the disconcerting industry report in Germany and France, the two biggest economies in the Euro Area.
Downbeat consumer expectations are caused by the uptick of Covid-19 cases in Germany, which prompted the local Government to reintroduce stricter lockdown measures.
Fears of a second economic downturn by the end of the year have stymied investor and consumer sentiment. However, all of the headway that has been made towards the development of a viable vaccine is likely to reinvigorate Germany's battered consumer confidence in November.
Markets were rattled this week by the constant barrage of vaccine news that circulates global media, resulting in a sharp decline in demand for safe-havens; renewed demand for energy; and strengthening of the dollar.
Meanwhile, the euro is also trying to find a stronger footing despite today's disappointing data. As can be seen on the 4H chart below, the single currency looks as if it has bottomed out against the pound.
The price action of the EURGBP continues to be concentrated within the boundaries of a massive descending channel, but the sterling has started to give way following last week's discouraging retail sales data in the UK.
The price looks set to test breaking out above the upper boundary of the channel, in line with the slowly rising bullish momentum. The latter can be inferred from the MACD indicator.
Even if it manages to do so, however, it would immediately have to deal with the major support (currently serving as a resistance) level at 0.89600.
EURGBP 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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