Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. In the month of May we have observed a consistent bullish trend in this pair.
Currently the British pound is losing positions against all other major currencies simply because of Brexit. The economy of the United Kingdom is relatively healthy, especially compared to the rest of the EU, so the pound is only weighed down by politics. Prime Minister Theresa May failed to reach a consensus with opposition leader Jeremy Corbyn and is currently working on a new withdrawal agreement that she has to present very soon. However, she has lost the approval of her government, which has suffered the most resignations in such a short period of time in British history. Now it is expected that she will step down in the beginning of June, so likely the pound will continue to be under pressure until there is more clarity as to who will head the UK government next.
The euro remains relatively neutral at the moment. There are no incentives to strengthen coming from the European Central Bank. Right now we are seeing a bit of a lull as Europe is entering several days of Parliamentary elections. Moreover, today’s Markit manufacturing and services PMI indices from the EU failed to meet the forecasts. Later today we expect the minutes of the ECB’s April meeting, which could increase volatility in all pairs with the euro.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8807, with the pair currently trading above it. The daily support levels lie at 0.8773 and 0.8738. The daily resistances are at 0.8843 and 0.8876. The indicators of technical analysis are giving us a strong buy recommendation in the daily term.
