Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. It seems that since about the middle of August the trend of this pair has been bearish, so that this asset is currently trading at a three-month minimum.
There are no new factors into play when it comes to the British pound. The long-term pressure of the United Kingdom reaching a trade deal with the European Union remains. The two parties have less than two months until the widely accepted soft deadline for a deal. Considering that the initial Brexit deal was reached in the last minute, experts are hoping that despite the lack of progress, the EU and the UK will manage to reach a compromise in the end. However, the longer they go without one, the more uncertain the position of the British pound becomes. Aside from Brexit, the GBP is also influenced by fundamentals in the short term. Today’s PMI reports from the United Kingdom disappointed investors. Their failure to meet the forecasts suggests that the pace of economic recovery in the UK is far from ideal. The overall outlook for the pound is neutral at present.
The euro is also facing its fair share of troubles. Though the summer began with a great bullish push and lots of fresh confidence in the euro thanks to the EU’s approval of a coordinated stimulus plan, the optimism of this news has finally run out. Economic reports are once again at the forefront when it comes to the euro, as they offer information on the economic recovery in the EU. Most recently investors were disappointed by lagging inflation and extremely low retail sales, but the Markit PMIs were better than the forecasts, indicating that all hope is not lost. Still, due to fundamentals offering mixed results over the past couple of weeks, it is hard for the euro to commit to a trend.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8887, with the pair currently trading above it. The daily support levels lie at 0.8863 and 0.8848. The daily resistances are at 0.8901 and 0.8926. The indicators of technical analysis agree on a strong sell recommendation today.
