Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Ever since May the trend of this pair has become more and more erratic as it refuses to commit to a steady trend. So far this week it has been trading almost flat just below the 0.86 level.
This week the British pound sterling is shining among all major currencies as one of the most promising assets. Just a few days ago Prime Minister Boris Johnson announced that the government will not be extending the last of the lockdowns past July 19, when the current measures expire. This means that in just two weeks the United Kingdom will be the first major economy to completely end its lockdowns since the coronavirus pandemic began in 2020. There are still concerns about the delta Covid-19 variant spreading throughout the UK - the country is currently seeing daily infections of 25-30,000 cases that keep rising each day. However, hospitalizations and fatalities remain low compared to the high number of coronavirus cases, so at least for now the government is confident that the coronavirus vaccines are preventing severe Covid-19 infections, which is going to allow them to safely reopen the United Kingdom. Thus, the prospects of the economy of the UK are very good and the pound is gaining momentum against other currencies.
As for the euro, its outlook is also positive, but right now it simply is not lucky enough to overtake the British pound. Overall, fundamental reports from the eurozone remain positive and the continent is well on its way to economic recovery. Normally, when things in the global economy are looking up, investors crave riskier assets such as the pound or the euro. The problem for the euro right now is that the United Kingdom has better recovery prospects and is thus more likely to overcome the pandemic before the EU, especially by ending its lockdowns before the bloc.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8555, with the pair currently trading above it. The daily support levels lie at 0.8526 and 0.8513. The daily resistances are at 0.8569 (overcome) and 0.8597. The indicators of technical analysis are a bit mixed but lean towards recommending a sell position today.
