Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair’s movement ever since May has been steadily upwards, though this week it began stalling a little.
The British pound at present is experiencing a weakening that is due to the lack of a Brexit solution from the United Kingdom. Theresa May officially stepped down last Friday and is now in office until a new Prime Minister is elected, so the government currently has no particular position regarding the UK’s departure from the European Union. Moreover, the Labour Party failed to secure a guarantee from Parliament that a no-deal Brexit is out of the question. Many of the candidates speculated to inherit May’s job are hard Brexiteers, but the prospect of the UK leaving the EU with no deal in place is extremely damaging to the pound, hence the weakening we have observed.
The euro recently received a boost from the European Central Bank showing more confidence in the European economy than previously expected by investors. However, yesterday the euro came in the line of fire as Donald Trump began stirring the waters of international trade once again. For about a year now Trump has said that he’d like to see the European Union import more natural gas from the United States. However, Europe is already engaged in plans with Russia for the construction of a new pipeline. Yesterday Trump threatened to impose sanctions on the EU if those plans are implemented, which weakened the euro.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8895, with the pair currently trading above it. The daily support levels lie at 0.8874 and 0.8851. The daily resistances are at 0.8918 and 0.8939. The indicators of technical analysis are giving us a strong buy recommendation in the daily term.
