Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Ever since August 12 the pair has been moving within a bullish wave, recovering from the multi-year low at 0.8460 that it sank to previously. This momentum still holds.
At present, things are a bit unclear for the British pound sterling. On the one hand, the United Kingdom is still dealing well with the coronavirus pandemic and has managed to keep hospitalizations low despite the high number of confirmed Covid-19 infections caused by the Delta variant. The pound has been one of the strongest risk-friendly currencies in 2021 due to expectations that the UK will recover from the pandemic faster than the European Union and that the Bank of England will tighten its monetary policy before the ECB. However, some of that optimism is waning at the moment, as traders are beginning to see a slowdown in the UK, while the EU is maintaining its recovery pace. Inflation rate data out of the UK yesterday was very disappointing, which weakened the pound, presumably because low inflation means the Bank of England won’t turn hawkish now.
As for the euro, the inflation rate reports from the eurozone were in line with the forecasts, indicating that the pace of economic recovery on the continent is consistent with what economists anticipate. From that perspective the euro appears a little bit more reliable and trustworthy than the pound, at least at the moment. There won’t be much else published this week that can boost the euro, but at least for now the low Covid-19 infection rates and positive inflation data seems enough to give the EUR an edge over the pound sterling.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8517, with the pair currently trading above it. The daily support levels lie at 0.8499 and 0.8486. The daily resistances are at 0.8530 and 0.8548. The indicators of technical analysis agree in strongly recommending a buy position today.
