Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The pair ended 2019 and began 2020 in an almost flat channel and seems to still be stuck there.
At the moment, the British pound continues to be influenced by the developments surrounding the United Kingdom’s exit from the European Union. It is now certain that at the end of this month the UK will leave the EU, which will mark the beginning of the transition period for negotiations. The United Kingdom is hoping to get a comprehensive free trade agreement done by the end of 2020, but EU Commission President Ursula von der Leyen yesterday reiterated that this will likely not be possible in just under 11 months. The way negotiations proceed will influence the value of the pound throughout the year, but so far investors see the sterling as a currency that will be under pressure for the foreseeable future.
On the other hand, the European single currency is not influenced as much by the possible negotiation difficulties lying ahead. The euro remains at its current levels because growth in the eurozone is stagnant. Despite a recent improvement in inflation rates in Germany, the eurozone CPI remains unchanged. Moreover, the global economy is currently not kind to riskier assets such as the euro, with investors preferring safe assets such as the yen, the franc, and the dollar instead.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8484, with the pair currently trading above it. The daily support levels lie at 0.8451 and 0.8422. The daily resistances are at 0.8513 and 0.8546. The indicators of technical analysis are a little mixed, but ultimately recommend a strong buy position.
