Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. So far this week the pair has been moving within a bearish trend. It is currently trading at a three-month minimum around the 0.8523 level.
At the moment, the British pound sterling is enjoying the reputation of one of the strongest currencies in the world. The United Kingdom is scheduled to exit the last of its coronavirus-related lockdowns next week, and despite some fears over the delta variant spreading in the UK, severe cases have been rare among the mostly-vaccinated population of the United Kingdom. Though recently the UK disappointed investors with its GDP reports, inflation has been above the target levels, showing that the economy is responding well to stimulus. The Bank of England might soon have to join other more hawkish regulators like the Bank of Canada or the Reserve Bank of New Zealand in officially curbing asset purchases and considering other forms of policy tightening. It’s worth noting that today’s employment change report from the UK failed to meet the forecast, echoing trends seen in the United States.
Where the European single currency is concerned, its own status is not bad, but it is also not as strong as the pound’s. The EU so far is doing better than the UK in terms of the delta variant of Covid-19, but this is partially because member states have been exposed to it less; they might still experience heavy outbreaks, albeit with a delay. Fundamentals from the eurozone remain positive and stimulus is still abundant, but the robust inflation growth in the United Kingdom is simply making the pound more attractive in these risk-loving times.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8528, with the pair currently trading slightly above it. The daily support levels lie at 0.8511 and 0.8485. The daily resistances are at 0.8554 and 0.8571. The indicators of technical analysis agree in strongly recommending a sell position today.
