Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Last week the pair traded more or less flat as the pound ran out of steam and was unable to push the euro further down. Over the past few days we have observed a slight recovery, with the pair holding at a two-week maximum at present.
Weakness has taken over the pound for the time being, at least as far as the EUR/GBP pair is concerned. A small contributor to this situation was some disappointing data from the United Kingdom: despite upticks in the PMI numbers, the UK showed inflation is lagging behind goals and actually lowered last month compared to the previous reading. Thus, the Bank of England’s plans to keep its monetary policy loose and accommodating makes more sense, despite investors hoping that the United Kingdom will recover from the pandemic faster than the EU. But more than that, investors now suspect that the pair had simply weakened too much in 2021 and it was time for the euro to fight back over the positions it lost to the pound these past few months.
When it comes to the European single currency, its trading bias is somewhat mixed. Indeed, the bloc is doing pretty poorly with coronavirus vaccinations, remaining far behind schedule, and is now facing a third wave of infections since its population is largely unprotected. Also, there were some hitches when it came to Covid-19 vaccines: the EU and the UK were on the verge of imposing export bans over the AstraZeneca vaccine, where there have been major interruptions in supply, complicating the vaccination campaign in both the UK and the EU. Eventually, both sides agreed to keep sharing vaccines with each other. Aside from the pandemic, fundamental reports from the EU have been positive, offering the euro short-term incentives to strengthen.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8628, with the pair currently trading below it. The daily support levels lie at 0.8609 and 0.8593. The daily resistances are at 0.8645 and 0.8663. The indicators of technical analysis are somewhat mixed but lean towards recommending a buy position today.
