Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair registered massive losses in February, but so far March has been a time of stabilization and minor growth.
The position of the British pound is a little precarious. On the one hand, investors are almost certain that there will be no hard Brexit on March 29. This upcoming Tuesday Parliament will hold another vote on Theresa May’s deal, but it is unclear whether it will pass, considering May has been unsuccessful in convincing the European Union to revise the Irish backstop clause, which MPs refuse to accept. If the vote fails, May can postpone Brexit and buy more time for negotiations, which is an often-talked-about scenario. Nevertheless, the fact that we are less than a month away from the initially agreed date for the United Kingdom’s exit from the bloc is not letting the sterling grow, despite the cautious optimism.
The euro is also in a tight spot. Fundamental data, while not altogether awful, continues to lag behind forecasts, keeping the euro low. Of chief importance today is the policy meeting of the European Central Bank. The markets expect that the ECB will signal a new quantitative easing program in order to shield the economy from the fallout of the trade conflicts that marked 2018 and caused a global economic slowdown. This dovish move will, however, weaken the euro further.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8595, with the pair currently trading above it. The daily support levels lie at 0.8570 and 0.8555. The daily resistances are at 0.8610 and 0.8635. The indicators of technical analysis are confident in giving us a strong sell recommendation.
