Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Since last week the trend has been within another descending wave, with the pair falling to its lowest level since February last year, trading around 0.85.
The British pound has had the upper hand in this crossing for most of 2021 so far. The most decisive factor for this is the pace of economic recovery, or at least the expectation of it. The United Kingdom experienced a worse coronavirus outbreak last year than many EU member states; however, the UK was quick to approve Covid-19 vaccines and to organize mass vaccination campaigns. As of now, close to 60% of the adult population of the United Kingdom has had at least one vaccination. The country might very well reach the 70% threshold of herd immunity this summer, which would permit all businesses to reopen as usual and for travel and tourism to resume. Thus, the pound will remain strong on the expectation that the UK’s economy will recover from the pandemic rather quickly.
The same cannot be said for the European single currency. The EU has failed in so many regards when it comes to its own vaccination efforts. Some of the fault lies in companies like Pfizer and AstraZeneca, who failed to make scheduled deliveries to the bloc, leaving many countries undersupplied with vaccines. But even when vaccines were available, administrative chaos and a rising anti-vax movement, not to mention mixed messaging about the safety of AstraZeneca’s vaccine have translated into further slowdowns in the vaccination of the bloc’s population. Now the EU will greet the second quarter of 2021 in yet another lockdown, adding further strain to its already fragile economy. It is very likely that the EUR/GBP will test further lows and that fundamental reports will not affect the rate of this pair significantly.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8516, with the pair currently trading right around it. The daily support levels lie at 0.8493 and 0.8478. The daily resistances are at 0.8531 and 0.8554. The indicators of technical analysis agree in strongly recommending a sell position today.
