Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. After a very convincing climb, the exchange rate for this pair turned downward this week.
The British pound, like other currencies this week, is currently mostly affected by the Bank of England and their monetary policy. The regulator is holding an important meeting to decide whether interest rates need to be adjusted. Investors expect that the interest rate will be left untouched at 0.75%/ Still, the announcement will come together with a speech that can tell us much about the Bank of England’s future intentions. With Brexit not going very well, especially considering the BoE was against it, many expect that the economy of the United Kingdom will slow down, which would require dovish action from the Bank of England.
Meanwhile, since last week’s report on this pair, the tables have turned for the euro again. Just last week the ECB appeared very confident, which buffed the euro. This week, however, the European Central Bank spoke about the possibility for a new round of stimulus measures and interest rate adjustments if they continue not to see any improvement in the European economy. This weakened the euro enough that it would give in to the Brexit-weary pound, hence the losses in the pair.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8893, with the pair currently trading below it. The daily support levels lie at 0.8859 and 0.8838. The daily resistances are at 0.8913 and 0.8948. The indicators of technical analysis are giving us a tentative sell recommendation in the daily term, but the moving averages disagree, so it might be better to wait for a stronger signal.
