Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. This week the pair’s movement appears more erratic, with both ups and downs.
The British pound is currently unable to stick to a stable trend due to the political turmoil in the United Kingdom, especially regarding Brexit. Changes of power are always a turbulent time for currencies - Theresa May is resigning tomorrow, but with her party doing poorly in the EU elections, it is unclear who the next Prime Minister will be. Most of the candidates who seem to be popular with the polls are hard Brexiteers, however, which is a damaging prospect for the GBP. If the UK leaves the EU in October without a deal, economists anticipate a recession and other problems, so the pound does not benefit from this outcome.
Today the euro is affected by a number of important events. First and foremost, the European Central Bank is holding a policy meeting where they would discuss what to do with the interest rates across the eurozone. A rate hike is extremely unlikely, considering there is no data to back up this kind of thinking; any further dovishness, on the other hand, will put additional pressure on the euro, which is already weak. After the meeting the ECB President Mario Draghi will give a speech, so keep an eye on that. Also, today the GDP report came in at 1.2%, just as predicted, so there were no surprises on that front.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8855, with the pair currently trading slightly above it. The daily support levels lie at 0.8832 and 0.8815. The daily resistances are at 0.8872 and 0.8895. The indicators of technical analysis are giving us a strong buy recommendation in the daily term.
