Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Despite two consecutive days of weakening, the pair remains within the bullish wave which began in early May.
The British pound today appears a tad more stable than yesterday, as retail sales came in better than expected. However, the overall tendency for the pound is to lose further positions. This is exacerbated by Boris Johnson’s statements that if he becomes Prime Minister (which now seems a very likely scenario), he will take the United Kingdom out of the EU, with or without a deal. A hard Brexit has long been what the markets fear, so Johnson’s leadership will very likely harm the value of the GBP. Today we expect an important report on liabilities from the Bank of England.
The situation of the European single currency remains unchanged. Data from the EU has not been outright awful lately, meeting inflation targets and such, but in general the European economy is constricted by market pessimism, trade conflicts, Brexit, and the like. The ECB will likely be announcing a new round of stimulus measures next week, which will further soften their already extremely dovish policy, and likely weaken the euro.
In terms of the daily chart, today we have a pivot point for the pair located at 0.9031, with the pair currently trading below it. The daily support levels lie at 0.9010 and 0.8992. The daily resistances are at 0.9049 and 0.9070. The indicators of technical analysis are confident in giving us a strong buy recommendation.
