Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Ever since the December elections, the range of the pair has been narrowing and over the past week it has been almost flat, with the slightest bullish undertone.
The British pound was recently boosted by strong business confidence and jobs in the most recent reports on the UK economy. This was somewhat unexpected, considering fundamental disappointments earlier in the month, and dispelled some of investors’ hopes for an interest rate cut at this month’s Bank of England policy meeting. This meeting is today and is highly anticipated; it is also Governor Mark Carney’s last, as he will be stepping down from his post soon. Besides the rate decision, it is important to remember that the United Kingdom will leave the EU tomorrow, officially kicking off the transition period. The latter may bring a lot of uncertainty as the EU and the UK start trade negotiations, a topic that will likely dictate the pound’s movements throughout 2020.
Meanwhile, the day began positively for the euro, with an unexpectedly large decrease in unemployment in Germany, the EU’s economic powerhouse. Meanwhile, the eurozone-wide unemployment rate also dropped from 7.5% to 7.4%, exceeding investors’ expectations. In the afternoon we expect the German CPI, which will have a strong bearing on pairs with the euro. An increase to 1.7% is expected.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8457, with the pair currently trading above it. The daily support levels lie at 0.8446 and 0.8435. The daily resistances are at 0.8468 and 0.8479. The indicators of technical analysis are a little mixed but lean towards recommending a strong sell position today.
