Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. After reaching multi-year highs in March, the pair began retreating, though it still remains at a higher level than before the pandemic began.
The British pound right now does not have much backing from investors. The United Kingdom is not as heavily affected by the Covid-19 pandemic as other European countries at present. However, the UK government has a delayed response to the pandemic compared to other countries, so it might still be far from seeing the peak of new cases. There were fears of the United Kingdom experiencing an economic recession even before the coronavirus, due to Brexit; now, these fears have doubled. Though the Bank of England has already taken action to support the economy, the overall sentiment regarding the British pound remains bearish.
Meanwhile, continental Europe is dealing with an even worse outbreak, with Italy and Spain each surpassing 100,000 cases and demonstrating higher death rates than other countries. Germany and France, the economic powerhouses of the EU, are also wrestling with the pandemic, as is the rest of Europe. The economic reports for March were disappointing, as was expected, considering the pandemic. Still, the euro has proven to be slightly more resilient than the pound in these trying times, though not enough to push higher. Right now the pair is undergoing a downward price correction which will continue in the near future.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8852, with the pair currently trading below it. The daily support levels lie at 0.8791 and 0.8724. The daily resistances are at 0.8920 and 0.8980. The indicators of technical analysis agree on a strong sell signal.
