Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair marked a sharp drop at the beginning of December but is currently trading in an almost flat, slightly slanted downwards channel.
The British pound has been able to stabilize over the past few weeks as polls have consistently indicated the Conservative Party is likely to win a majority in today’s general elections in the UK, with Boris Johnson keeping his job as Prime Minister. This outcome is favorable for the pound inasmuch as it will allow the UK Parliament to pass all the necessary Brexit legislation and quit stalling. However, because Johnson’s win has been near certain for weeks now, we don’t expect a strong bullish momentum in the pound after the results of the elections are released, as they already be priced in. On the contrary, if the Conservatives’ majority is less than predicted, then we expect a sudden weakness in the pound. It will be helpful to keep an eye on the live results as votes start coming in today.
Meanwhile, things are pretty quiet in the rest of the European Union. Today there will be a policy meeting of the European Central Bank, its last for 2019, but we expect President Lagarde to confirm the bank’s intention to stick to the current plan without adjustments. The EU is waiting on Donald Trump, who recently slapped France with tariffs and has threatened other EU countries with more of the same, as well as the results from the UK elections, which would be telling of how Brexit would go. The ECB might want to wait until all of this plays out before deciding its next step, so for now, the euro will be passive.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8432, with the pair currently trading very near, just a pip or two above it. The daily support levels lie at 0.8411 and 0.8390. The daily resistances are at 0.8453 and 0.8474. The indicators of technical analysis recommend a strong sell in the daily term.
