Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair continues to be affected by political developments.
The fate of the British pound remains uncertain. Yesterday, the United Kingdom published inflation data for August, and both CPI reports came in worse than expected. These results indicate that the British economy is slowing down, in line with analysts’ ominous prediction that Brexit will result in a recession for the UK. However, at today’s policy meeting, the Bank of England decided not to lower interest rates. A softening of the monetary policy is an efficient way to protect the economy from future damage, but the BoE still seems undecided. The bank is likely waiting for more clarity on Brexit in order to plan the appropriate measures.
On the other hand, the European Central Bank has been a bit less shy in their dovishness. They recently lowered the deposit rate and announced new QE packages to start in November. Though this softening of the already loose monetary policy will likely result in improved economic reports from the eurozone, right now the EUR is struggling to keep up with the uncertainty on the global financial markets.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8849, with the pair currently trading above it. The daily support levels lie at 0.8817 and 0.8788. The daily resistances are at 0.8878 and 0.8910. The indicators of technical analysis suggest a strong sell in the daily term.
