Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. After a brief price correction, this week the pair turned bullish again.
The movement of pairs with the British pound right now remain entirely under the influence of Brexit developments, due to the absence of any significant reports on the horizon. In a dramatic turn of events, this week the Supreme Court of the United Kingdom ruled that Prime Minister Boris Johnson’s decision to suspend Parliament for five weeks was unlawful. As a result, MPs returned to work yesterday.
Now the Brexit saga continues: Boris Johnson is trying to negotiate a new deal with the EU, but he would still need Parliament’s approval of that agreement. In the event that the PM fails to produce a deal that Parliament can approve of before October 19, the government will have to ask for an extension to the Brexit deadline, or face a legal challenge in court. In other words, it’s anyone’s guess what would happen with the UK’s divorce from the EU. The threat of a no-deal Brexit remains, and that will continue to pressure the pound.
Meanwhile, the euro continues to show a pronounced weakness. The ultra soft monetary policy of the ECB is not supporting the single currency. Moreover, QE hasn’t started yet, so there hasn’t been any improvement in fundamental reports from the eurozone. Investors are pessimistic about the EU and its economy. The only reason why the EUR/GBP is bullish is that the pound is even more of a wild card than the euro at the moment.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8852, with the pair currently trading above it. The daily support levels lie at 0.8823 and 0.8785. The daily resistances are at 0.8890 and 0.8919. The indicators of technical analysis suggest a strong sell in the daily term.
