Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Towards the end of June the pair rebounded from the 0.9134 level, previously reached in mid-March. After a somewhat shaky journey, it seems that the rate is trying to approach that maximum again.
At present, the British pound sterling finds itself in a hard to predict position. It appears that the United Kingdom is successfully exiting the last of its lockdowns, despite news of a few local coronavirus outbreaks. The economy is on its way to recovery and the outlook for it will likely improve if the government implements more fiscal stimulus measures. However, the lack of progress in the negotiations between the UK and the EU regarding their future relationship is weighing heavily on the pound and will become an even greater burden the longer this uncertainty goes on. Thus, at the moment the pound is just slightly more vulnerable than the euro.
The European single currency has strengthened significantly in recent days due to the European Union successfully passing a joint stimulus deal. The proposal, which was originally put forward by the European Commission, will allow the EU member states that have been hit the hardest by the coronavirus pandemic to borrow 390 billion euro in grants and an additional 360 billion in loans. The recovery fund will in this way help Europe overcome the damage done by Covid-19 and bounce back sooner than it would without it. If fundamentals from the eurozone are good, the euro itself will continue to strengthen.
In terms of the daily chart, today we have a pivot point for the pair located at 0.9091, with the pair currently trading above it. The daily support levels lie at 0.9044 and 0.9003. The daily resistances are at 0.9132 and 0.9179. The indicators of technical analysis strongly recommend a buy position today.
