Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. In the second week of May a new, somewhat subdued bullish wave began within the trend of this pair. It may be losing momentum at present, but the pair still remains at its highest level in two weeks.
The overall trading bias of the British pound at the moment is mixed. Chart-wise, May has been known to be a difficult month for this currency, but the fact that it put up a lot of resistance to the euro and did not allow the US dollar or Japanese yen to move too much against it shows that sterling is actually fairly strong. Investors have a lot of hope that the economy of the United Kingdom will quickly recover from the coronavirus pandemic, considering the success of the vaccination campaign and the really low infection rate observed at present. Most UK fundamentals have suggested the same. However, the pattern of the EUR/GBP rate right now seems to be an ascending triangle which hasn’t reached the consolidation stage yet, so from a technical point of view, the pound might allow some more growth for the euro.
As for the European single currency, it is doing well in its own right, even though the EU is considerably behind the UK in terms of vaccinations. Most economic fundamentals from the eurozone have been positive. However, inflation is not among the numbers that are rising as fast as expected, which may indicate a slightly slower recovery process. Still, the European Central Bank is not utilizing the full extent of its asset purchasing program, so it has that tool to rely on in case inflation slows down noticeably. Considering the chart pattern (ascending triangle) that is currently forming, the euro will likely be able to push the rate a bit higher in the near future, though the long-term prospects of the pound are better.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8642, with the pair currently trading slightly below it. The daily support levels lie at 0.8618 and 0.8604. The daily resistances are at 0.8656 and 0.8680. The indicators of technical analysis are mixed but lean towards recommending a buy position today.
