Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. After a gradual climb, the pound finally managed to shake off some of the pressure and recovered some of its lost positions.
Things for the euro at this point continue in the well-established pattern. The European Central Bank is not expected to make any hawkish moves which otherwise might support the euro. Their QE is supposed to start decreasing from this month and wind down by the end of 2018. However, investors are keeping a close eye on the developing financial problems in Turkey. Since Turkish banks owe quite a bit to the European creditors, if the lira defaults and the debts cannot be paid back, this would affect the eurozone and the ECB might have to keep the stimulus in place to weather the storm. This is why right now any bad news from Turkey can shake investors’ confidence in the euro.
The British pound, on the other hand, managed to recover some of its lost positions based on a willingness from the EU to work with the United Kingdom on securing a Brexit deal. Whether they negotiate a soft or a hard Brexit is what’s currently weighing on the pound. Moreover, tomorrow we expect a statement on the inflation rate by the Bank of England, which bears a high degree of importance regarding the pair.
In terms of the daily chart, today we have a pivot point for the pair located at 0.9006, with the pair currently trading below it. We expect the EUR/GBP to continue dropping in value, so look towards the nearby support levels at 0.8960 and 0.8911. The daily resistances are at 0.9055 and 0.9101. The indicators of technical analysis are showing us mixed signals, but lean towards a buy recommendation.
