Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The rate continues to move in the large upward wave that began in May.
The British pound lacks all incentives to strengthen. Brexit continues to weigh down on the pound as the United Kingdom is choosing a new Prime Minister. Currently Boris Jonhson seems the most likely winner. Johnson is known as a hard Brexiteer and his election to the position of PM will have a huge impact on the GBP. In general, the markets fear a hard Brexit and the Bank of England has warned against it multiple times. Investors are expecting the BoE to implement a rate cut in an effort to support the economy and prevent a recession.
The European single currency’s lot is not much better. Global trade worries and the general economic slowdown are pressuring the euro. Despite a healthy increase in inflation, the PMI index and retail sales were off-target today. The ECB is also preparing for a dovish adjustment of their current monetary policy, so the euro cannot strengthen.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8973, with the pair currently trading very near it. The daily support levels lie at 0.8957 and 0.8944. The daily resistances are at 0.8986 and 0.9002. The indicators of technical analysis are confident in giving us a strong buy recommendation.
