Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Since the pair’s big decline at the end of March, we have seen the trend become almost flat, with very small fluctuations. However, from last week until now the rate has been slowly climbing upwards. It appears that while both currencies are pressured by the same factors, the euro is able to overtake the pound slightly.
The future course of the EUR/GBP pair is quite difficult to predict at present due to the fact that both currencies are not particularly strong right now. Both the United Kingdom and the European Union were heavily affected by the coronavirus pandemic, which meant businesses had to close down and workers to be laid off or put on paid leave, which meant governments have to dig deep in their pockets to support everyone through the crisis. Thus, fundamentals from both the UK and the EU have been quite poor.
Somewhat reassuringly for the euro, today the unemployment rate from France was slightly lower than expected, as was the inflation rate in Germany. These reports indicate that the dip in the European economy might not be quite as severe as expected. Similarly, yesterday’s preliminary GDP reports from the United Kingdom, though in negative territory, were slightly better than the forecasts. Tomorrow might be the most decisive day for the pair, as the euro will get a chance to strengthen if the eurozone’s GDP report exceeds investors’ expectations.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8843, with the pair currently trading slightly above it. The daily support levels lie at 0.8807 and 0.8770. The daily resistances are at 0.8880 and 0.8916. The indicators of technical analysis agree on a strong buy recommendation today.
