Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Despite a small recovery at the end of last week, the trend of this pair continues to be predominantly bearish. It is currently trading just above 0.85, which is the lowest level seen since April.
The situation of the British pound sterling is a bit complicated at the moment. Over the past few days there has been an absence of important fundamental data to influence the pound. The only exception is the July composite and services final PMIs published yesterday, which both exceeded the forecasts, though they were still lower than the previous month. So the economy of the United Kingdom appears to be doing okay, but with the spread of the delta variant and many people told to self-isolate this month, the impact on the economy might not show until next month’s data starts pouring in. The most important event for the pound right now is today’s policy meeting of the Bank of England. The BoE has to make a decision on the interest rate, but a hike is not expected right now. Still, investors will be eagerly awaiting any comments on other possible hawkish action from the regulator, considering the United Kingdom is recovering from the pandemic relatively well.
As for the euro, the data there is a bit more mixed. GDP and inflation statistics last week were broadly positive and allowed the euro to push upward, but this week’s PMI numbers disappointed investors and raised concerns about the stability of the economic recovery processes in the European Union. There will not be much from the EU today in terms of reports, so investors are working with things they already know: things are looking up (mostly) but the European Central Bank is committed to dovishness in the long term. Thus, the euro may yield more ground to the pound today, unless the Bank of England’s meeting and votes reveal an unexpected degree of dovishness there too.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8519, with the pair currently trading below it. The daily support levels lie at 0.8504 and 0.8488. The daily resistances are at 0.8535 and 0.8550. The indicators of technical analysis agree in strongly recommending a sell position today.
