Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. After a modest uptick, right on New Year’s day the pair dropped a little, but now the rate is in the green once more.
The position of the British pound remains under the influence of the political developments in the United Kingdom. The sterling initially strengthened after Boris Johnson’s win at the December general elections because it reinforced the prospect of the UK leaving the European Union on January 31. However, Johnson decided to shorten the negotiation time to just 11 months, which is making investors doubt that the UK will be able to negotiate trade agreements with all EU member states. This distrust in turn can weaken the pound.
Meanwhile, things continue in the same vein as always in the European union. The economic forecast for the first quarter of 2020 is one of slow growth and low inflation rates, which in turn means that the euro will likely remain weak. The single currency also remains vulnerable to outside negative factors for the markets, such as the trade conflict between the US and China, and the possibility of the US slapping tariffs on EU goods.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8463, with the pair currently trading above it. The daily support levels lie at 0.8453 and 0.8439. The daily resistances are at 0.8477 and 0.8487. The indicators of technical analysis are mixed, but lean towards recommending a sell position.
