Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair has been slowly but steadily climbing since late September.
The British pound is currently experiencing a pronounced weakness due to the failure of the UK government to negotiate a feasible Brexit deal. Prime Minister Boris Johnson sent in his proposals for a deal last week. However, the European Union raised a number of objections, most notably because Johnson did not present a solid plan on how to avoid a hard border between Northern Ireland and the Republic of Ireland. The bloc asked the UK government to revise the proposal, but in the days since multiple leaks have revealed Johnson does not have a better plan. The Bank of England is also taking a wait-and-see approach to Brexit because it is not certain what to prepare for.
The European single currency still lacks incentives for growth. However, the uncertainty surrounding the pound is enough to give the euro the advantage in this pair. Today we expect the minutes of the ECB’s most recent meeting in September, which will tell us more about the central bank’s plans regarding monetary policy in the near future. The CPI indices will be published tomorrow - if they fail to meet the forecasts, the euro may weaken.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8978, with the pair currently trading above it. The daily support levels lie at 0.8959 and 0.8920. The daily resistances are at 0.9016 and 0.9036. The indicators of technical analysis recommend a strong buy in the daily term.
