Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Last week the trend of this pair got messy, when a sudden downward movement interrupted the rally that the euro started staging against the pound earlier in April. However, the bearish correction proved to be short-lived and the euro is back on track to recover its lost positions this week.
In all fairness, not much has changed for the British pound in recent weeks. The sterling appreciated quite a bit in Q1 due to the success of the Covid-19 vaccination campaign in the United Kingdom. However, some of that optimism turned old, and the UK’s advantage over the EU has grown smaller as the bloc managed to ramp up its own inoculation program. In addition, investors are beginning to see a potential source of risk in the upcoming elections in Scotland, especially considering the northernmost member of the UK was confidently in favor of staying in the European Union and a change of power could really get the conversation about another independence referendum going.
As for the European single currency, things are looking up a bit. Fundamental reports from the eurozone have been positive or at least matching the forecasts. All major EU economies are also moving towards higher vaccination percentages, with Germany having close to 30 doses per 100 people and France close behind at 26. Though this still puts the prospect of herd immunity by this summer in question, it is an improvement to the forecasts made earlier in 2021. A factor for the euro today is this month’s policy meeting of the European Central Bank, but most probably there will be no adjustments to monetary policy at this time due to the improving situation in the bloc.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8632, with the pair currently trading above it. The daily support levels lie at 0.8617 and 0.8597. The daily resistances are at 0.8652 and 0.8667. The indicators of technical analysis agree in strongly recommending a buy position today.
