Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Over the past month, the trend of this pair has been decidedly bullish, with the smallest of hiccups here and there, but now the upward momentum might be exhausted.
The British pound is under pressure due to many factors. To begin with, there are the difficult Brexit negotiations with the EU, which Prime Minister Boris Johnson seems to be making even harder than they need to be. Furthermore, the United Kingdom is also fighting a coronavirus outbreak right now. While Brexit alone posed a great concern for the UK economy and suggested an upcoming recession, all of the businesses closing down due to quarantines are making the situation even worse. Despite a recent interest rate cut by the Bank of England, hard times lie ahead for the British pound.
The euro is not fairing that much differently. Covid-19 has spread all across Europe and many EU countries have asked the population to observe a quarantine and social distancing policy. Factories are closing down, small businesses are out of the picture, and the hustle and bustle of big cities all over Europe has been subdued by the pandemic. The euro could strengthen a bit if the ECB announces a more ambitious plan to support the eurozone’s economy, as so far the measures implemented have been somewhat disappointing.
In terms of the daily chart, today we have a pivot point for the pair located at 0.9329, with the pair currently trading above it. The daily support levels lie at 0.9167 and 0.8906. The daily resistances are at 0.9590 and 0.9752. The indicators of technical analysis agree on a strong buy signal.
