Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair has been declining since last week, as Brexit negotiations were going on in full force.
The British pound has been stabilizing in price for seven days straight on hopes that Boris Johnson will manage to produce a withdrawal agreement. Last week, it seemed that Irish PM Leo Varadkar approved of the direction Boris Johnson was taking, giving the pound its first significant boost. The progress was further confirmed by chief EU negotiator Michel Barnier. Today, right before the start of a two-day EU summit, both Johnson and Jean-Claude Juncker announced a deal has been reached. The details are unclear but the EU will likely back the deal, bringing the UK one step closer to avoiding a hard Brexit at the end of the month. Nevertheless, it is still possible for the deal to be rejected - either by an EU member, or by the UK Parliament (which must approve it to make it binding).
The European single currency has had a lazy week. In the absence of any significant reports and announcements, the euro pairs have mostly been driven by the other currency in each pair. The weakness we observe in the EUR/GBP currently is not so much due to any worsening of the euro’s status, as much as the strengthening of the pound on hopes of a smooth Brexit. The rate will be influenced by news from the EU summit today and tomorrow.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8651, with the pair currently trading above it. The daily support levels lie at 0.8585 and 0.8533. The daily resistances are at 0.8704 and 0.8769. The indicators of technical analysis recommend a strong sell in the daily term.
