Today we would take a look at the EUR/GBP currency pair. After forming two tops previously in the fall of 2017, and then declining in the beginning of December on news that Brexit negotiations will move forward, now the price is gradually making its way up again.
A quick look at the pair’s fundamentals can tell us a lot about the factors currently influencing this pair. All is calm in Europe at the end of the year, with perhaps the only possible source of uncertainty coming from Catalonia where the debate over independence from Spain is still ongoing. Nevertheless, it seems as neither Spain, nor Catalonia are prone to take a risky action, so the influence of this event on the euro has subsided. In addition, economic data from the European Union continues to come in strong and investors speculate that we may hear about the end of the stimulus measures by the ECB in 2018, which would certainly boost the single currency.
Meanwhile, news has been positive for the British pound as well. After much diplomatic struggle during the first year of Brexit negotiations, Britain finally agreed to meet the EU’s conditions at the first stage of the talks, and the United Kingdom can now hope for smoother negotiations on trade issues in 2018. This has given the pound some long-needed support and in general we expect it to rally.
In terms of the daily chart, today for the pair we have a pivot point located at 0.8879. If the pair drops below this point, expect a possible retreat to the nearby support levels at 0.8850 and 0.8824. However, for today we expect the EUR/GBP will be able to overtake the pivot and touch the resistance either at 0.8905 or 0.8934. The indicators of technical analysis are unanimous in indicating a strong buy signal.
