Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. During the past ten days the pair has been steadily bearish and it seems that the weakness is set to continue.
The British pound is able to resist the euro and remain strong despite the chaos of Brexit. Prime Minister Theresa May has failed to present a Plan B that is significantly different from Plan A, choosing instead to focus on the issue of the Irish backstop in order to convince at least the members of her own Conservative party to support the bill in the second vote next week. However, investors seem to have enough confidence that a hard Brexit will be avoided; whether that happens via a successful vote on a bill or if the United Kingdom cancels Brexit altogether in a second referendum. Any signs of a hard Brexit might weaken the pound, but for now it remains stable.
Meanwhile, the euro continues to weaken. Economic data from around the eurozone is not ideal and it is clear that the damage done to the global economy by the trade war between the United States and China is also affecting Europe. Today the European Central Bank is having a policy meeting, but we expect them to come out of that without raising interest rates, keeping them at 0.00% for the foreseeable future. ECB President Mario Draghi will speak later today, which will hopefully offer some clues as to how the central bank wants to handle the economic slowdown.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8729, with the pair currently trading well below it. The daily support levels lie at 0.8675 and 0.8644. The daily resistances are at 0.8760 and 0.8814. The indicators of technical analysis and moving averages are recommending a strong sell in the daily term.
