Data from Great Britain fails again (Daily analysis 14.01.2019)

After data from Germany, Italy and France, it was clear that industrial production in the eurozone was likely to fall sharply. However, it was much stronger than expected. The euro depreciates little, but supply pressure may increase, also on the zloty.

The most important macro data (CET - Central European Time). Surveys of macro data are based on information from Bloomberg unless noted otherwise.

• 2:00 p.m.: Core inflation in Poland for December (estimates: 0.6% year-on-year).
• 2:00 p.m.: Current account balance of Poland in December (estimates: minus 484 million EUR).

The biggest drop in 6 years

On the last day of the previous week, the pound appreciated in relation to almost all currencies. Around midday, the British currency rose as well. The price of the pound (about 4.80 PLN) is the upper limit of quotations from the last 5 weeks. However, it should not be expected that such a level will be maintained. Tomorrow in the evening there will be a vote in the British Parliament on the Brexit plan worked out by the Theresa May government.

It is almost certain that May will lose this vote, even though she is trying to get more support for her plan. The British Prime Minister has recently changed tactics. So far she has argued that her plan is better than leaving the ranks of the EU without an agreement (hard Brexit). Now she suggests that rejection of her plan in parliament could mean no Brexit at all. Combined with Friday's (government denied) "Evening Standard" reports about the delay of the Brexit and the decreasing risk of a chaotic exit from the EU since December, this could now strengthen the pound. However, options remain open after a lost vote - including new elections and a second referendum - and uncertainty may put pressure on the British currency.

However, there is no doubt about industrial production in the eurozone - the one that was terrible in November. It decreased by 3.3 per cent per year, which was the biggest fall in six years and 1.2 percentage points more than the market consensus. Although it can be said that this is already historical data, it strongly suggests that the economic slowdown may come faster and be slightly deeper than previously expected. After today's Eurostat publication, the single currency lost a little, but these were very limited changes. It will, therefore, be important how the readings for the coming months will be shaped. If market expectations fail and the trend of a strong decline in the industrial sector continues, then the supply pressure on the euro may clearly increase.

This is important for Poland

The worse economic situation in the eurozone is also bad news for Poland, which is strongly connected with the region regarding trade. The zloty was in a slightly weaker condition until midday, although changes in relation to the main currencies were limited. The EUR/PLN exchange rate was slightly below 4.30, a level that has recently meant stabilisation for this pair.