Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Ever since the middle of the month, the price of this pair has been slowly climbing up, a movement that continues today.
The value of the British pound sterling is mainly tied to two things: the fundamental reports from the United Kingdom, and the developments in the post-Brexit negotiations with the European Union. There has been no progress on the second front, as the UK has only been out of the bloc for a few weeks; the government is likely still outlining its plans and goals before the talks begin in earnest. In terms of economic reports, this week has been quiet for the UK. Recent data was generally positive, making investors doubt when exactly the Bank of England might decide to relax its policy. Yet, in the long term, there is a high likelihood that the UK’s economy will suffer due to the separation from the EU and its single market. Thus, the pound will remain under pressure.
Things are not much better for the euro. The most recent economic data was in line with forecasts, showing that the European economy is not too bad off. In particular, we saw improvements in consumer and business confidence, as well as several PMI readings. Nevertheless, the euro remains a bit spooked by the overall market pessimism caused by the coronavirus epidemic. The fact that the disease is now present in multiple European countries is not helping things. The deciding factor for this pair will come tomorrow in the form of CPI and unemployment data from Germany. If these reports beat the forecasts, the euro will appear stronger than the pound.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8411, with the pair currently trading above it. The daily support levels lie at 0.8379 and 0.8324. The daily resistances are at 0.8466 (overcome) and 0.8498. The indicators of technical analysis agree on a strong buy signal.
