Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Since the beginning of October the exchange rate has undergone a dramatic drop, falling to its lowest level in over two months. The pair is still trading at around 0.8460.
The British pound is currently very well supported and shines as one of the best performing currencies out there. The latest GDP reports published earlier this week indicated that the United Kingdom’s economy grew more than expected, which bodes well for the country’s recovery from the coronavirus pandemic. Despite a few hiccups here and there, economic fundamentals from the UK are mostly good. This, in turn, is strengthening the expectation among investors that the Bank of England will have to increase interest rates before the year’s end in order to keep inflation from rising dangerously high. As a result, the pound will likely stay strong.
As for the European single currency, right now it doesn’t have any incentives to grow. The European Central Bank has made its intentions to keep its monetary policy loose and accommodative known, disregarding the recent spikes in inflation as a result of growing fuel prices. Therefore, due to the divergence of policities between the ECB and the Bank of England, the euro will draw the short stick and lose.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8485, with the pair currently trading below it. The daily support levels lie at 0.8472 (overcome) and 0.8459. The daily resistances are at 0.8498 and 0.8511. The indicators of technical analysis agree in strongly recommending a sell position today.
