Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. So far this week the pair has displayed a mostly flat trend with very slight fluctuations around the 0.8690 level.
At present, the EUR/GBP pair is trading with a very mixed bias, largely due to the absence of strong factors to influence either the pound or the euro. On the sterling’s side of things, there have not been particularly exciting fundamentals this week. Moreover, there are some possible negative factors, for instance, the current political issues in Northern Ireland, whose First Minister has been dismissed. The country, which is a member of the UK, might head into early elections. In addition, Scotland is also preparing for elections in a couple of weeks. These political developments within the United Kingdom can pressure the pound for some time.
Nevertheless, even if the pound is somewhat under pressure, the euro does not have much to base its resistance on. The United Kingdom has vaccinated close to 50% of its population with at least one dose of a Covid-19 vaccine, while the EU has inoculated under 30%. This disparity indicates that the European Union is more likely to continue to struggle with the pandemic and face future lockdowns, which can harm its economy more, while the UK is set for recovery. Even though the EU has improved the way it handles vaccinations in Q2 compared to the beginning of 2021, there is a lot more to be desired in that regard, and an increased likelihood of the pandemic being a problem for a while longer. While risk appetite might help the euro against the dollar, it won’t do much against the pound. This is why the bias for this pair is so mixed at the moment.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8696, with the pair currently trading right around it. The daily support levels lie at 0.8684 and 0.8675. The daily resistances are at 0.8706 and 0.8717. The indicators of technical analysis agree in strongly recommending a buy position today.
