Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Ever since October, the movements of this pair have been pretty flat, though in November the flat range shifted even lower as the UK is preparing for elections.
The British pound this week is influenced by an abundance of fundamental reports and the political developments in the United Kingdom, where there is currently an election campaign going on. The week began with GDP data that showed the UK’s economy shrank more than expected in Q3 due to the Brexit troubles, as did the trade balance. Weekly earnings were also down. Most importantly, the CPI was lower than expected at 1.5%. Despite all of these indications that economic growth in the UK is slowing down, the Bank of England chose not to touch the interest rate, likely postponing this decision for after the elections. In terms of the vote, the polls so far indicate the Conservatives are in the lead and may secure a majority in Parliament that would allow them to proceed with Boris Johnson’s withdrawal agreement.
In Europe, things appear to be better than expected, though this has failed to stabilize the single currency. Earlier this week, the ZEW economic survey showed Germany’s economy is not in as bad a state as expected. This was confirmed by today’s GDP reports which show the German economy surprisingly grew in Q3. A bit later today the ECB will release the GDP data for the whole eurozone, which will likely have a strong impact on the euro and this pair in particular. The forecast is 1.1%, no change from the last reading. If it is better than that, we may see the euro take over the pound.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8572, with the pair currently trading above it. The daily support levels lie at 0.8555 and 0.8543. The daily resistances are at 0.8584 and 0.8601. The indicators of technical analysis recommend a strong sell in the daily term.
