Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair experienced some minor ups and downs recently, but overall it remains in a bullish wave that’s been even steeper since the end of July.
The British pound at the moment is not able to strengthen its position against other major currencies. The main reason for this is Brexit and the pessimism within the UK Parliament. Newly-appointed Prime Minister Boris Johnson seems intent on heading for a no-deal Brexit and has so far not proposed anything to Parliament. With just 3 months until the deadline and no solution in sight, even Conservatives who are against a hard Brexit are getting uneasy and speaking against the PM. However, even if there is a vote of no-confidence against Johnson, three months will not be enough time to get rid of his cabinet and appoint a new leader, and so the UK will still default to a no-deal exit from the European Union. The Bank of England and other prominent economists and entrepreneurs have warned that this would be the worst case scenario for the UK and its economy.
The euro is undergoing its own struggles at the moment. Recent fundamentals were worse than forecasted, showing that the eurozone’s economy is slowing down faster than is preferrable. The European Central Bank is likely to loosen its monetary policy soon in order to shield the economy from some of this damage. Still, weak as it is, the euro is doing better than the pound, under the circumstances.
In terms of the daily chart, today we have a pivot point for the pair located at 0.9222, with the pair currently trading very near, slightly below it. The daily support levels lie at 0.9196 and 0.9163. The daily resistances are at 0.9255 and 0.9281. The indicators of technical analysis are confident in giving us a strong buy recommendation.
