Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair was climbing all throughout last week, but since Tuesday it has turned slightly bearish again.
The British pound is currently facing quite a lot of pressure. This week the United Kingdom is heading into negotiations with the European Union regarding what would happen after the end of the transition period, i.e. the end of the year. Prime Minister Boris Johnson has been making some crucial demands of the EU, such as a request that the European Court of Justice is not involved in the talks. The EU is unlikely to oblige, which is just one of the reasons why investors expect the negotiations to be long and strenuous, weakening the pound in the long term. Fundamentals from the United Kingdom have been mixed, preventing the pound from strengthening significantly. Today the Bank of England Chair Carney will speak, likely discussing how the central bank plans to handle the economic fallout from the coronavirus epidemic.
The European single currency has held onto its ground where it comes to economic performance. Recently, all reports coming from the eurozone have met or bested the forecasts, showing that the economy is not in as bad of a state as expected. However, the Covid-19 outbreak is harming the global economy as a whole, and Europe is not immune to the damage. Plus, the negotiations with the UK will certainly have an effect on the euro as well. Thus, the pair might be quite volatile in the coming days.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8683, with the pair currently trading below it. The daily support levels lie at 0.8621 and 0.8587. The daily resistances are at 0.8717 (overcome) and 0.8779. The indicators of technical analysis agree on a strong buy signal.
