Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Both currencies are struggling for their own reasons, so naturally this pair has been very volatile lately as the markets are trying to determine whether the euro or the pound is doing worse.
The British pound is currently relatively neutral. Recent fundamentals from the United Kingdom were not awful, but the economy is overall waiting for more progress in the Brexit issue, as businesses still don’t know what to expect. Because the United Kingdom’s exit from the EU was postponed until October, there is a political lull right now which is not pulling the pound either one way or the other. Next week we would hear from the Bank of England and that will likely give us more pointers as to what’s in store for the sterling.
Ever since the beginning of April the euro has been gradually able to push against the pound and climb upwards. Yesterday it did lose out to the sterling on account of very disappointing reports from Germany, but today the European single currency is once again poised for gains. Nevertheless, we need to bear in mind that the European economy is not doing well overall, and that there are fears of a trade conflict with the United States. With no policy changes in sight, the euro is likely to remain a weak currency, and the only reason it is taking over the pair is that the pound is even more uncertain.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8651, with the pair currently trading slightly below it. The daily support levels lie at 0.8623 and 0.8602. The daily resistances are at 0.8672 and 0.8700. The indicators of technical analysis are giving us a strong buy recommendation.
