Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. This week the pair opened sharply down before stabilizing and today we are seeing modest growth in the exchange rate again.
The overall picture of the British pound sterling right now remains quite positive. The United Kingdom has done a great job of vaccinating its population, with close to 80 vaccinations per 100 people, and effectively over 50% of the adult population is partially or fully vaccinated against the coronavirus. In addition, this week the United Kingdom’s Parliament reopened after the Queen outlined its agenda for this year, and due to the clear majority of Boris Johnson’s government, investors expect the PM will have no trouble passing any stimulus bills, if necessary. Recent inflation and GDP data has been positive, and even the elections in Scotland were more or less uneventful. Due to the improving situation, the Bank of England may join the Bank of Canada in becoming one of the first regulators to back off dovish measures and begin considering an early increase in interest rates to prevent the overheating of the economy.
As for the euro, it is true that its own background is also positive at the moment. The coronavirus pandemic is dying out in the European Union as vaccinations are ramping up. Fundamental reports out of the EU have been a bit mixed but positive for the most part. Furthermore, risk appetite among investors has boosted interest in the euro, though it’s worth noting that the British pound is also a risk asset, so market sentiment is working in favor of both currencies in this pair right now.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8582, with the pair currently trading above it. The daily support levels lie at 0.8565 and 0.8542. The daily resistances are at 0.8605 (overcome) and 0.8622. The indicators of technical analysis agree in strongly recommending a sell position today.
