Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Over the past ten days the pair has established a more or less flat trend, signalling to investors that the massive bearish wave observed so far in 2021 might be over and that the rate has finally reached a strong support level that will prevent it from falling below 0.85.
This week the British pound, like many other major currencies, will be affected by a meeting of the central bank that regulates it, namely the Bank of England. The BoE is gathering today to decide whether any changes to its monetary policy are necessary. The situation in the UK is somewhat similar to what we’ve observed in the United States, in that vaccinations are going quite well and the lockdowns are coming to an end, suggesting that the UK might recover from the pandemic earlier than expected. As a result, the Bank of England may begin to discuss plans for a gradual phasing out of the current loose policies that are supporting the economy. Still, no actual changes are expected today, just clues about the future.
As for the euro, in terms of fundamental factors, it will be under more pressure than the pound. Since word first broke out about deaths and blood clot issues among people that had received the AstraZeneca vaccine last week, more and more EU countries have stopped administering it, despite no evidence of the vaccine causing the problem. The European Medicines Agency is due to publish a report on the safety of the vaccine later today that will likely decide if EU member states will resume using it or not. But in the meantime, Europe has fallen further behind on its Covid-19 vaccination schedule, all while experiencing a third wave of infections. As the prospect of a prolonged crisis increases, the euro is going to face more downward pressure.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8574, with the pair currently trading below it. The daily support levels lie at 0.8541 and 0.8507. The daily resistances are at 0.8609 and 0.8641. The indicators of technical analysis agree in strongly recommending a sell position today.
