Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. Since December, the trend has formed gradually lower peaks on the chart. The downward trend that started exactly a week ago seems more persistent and has pushed the pair to a six-week minimum.
With Brexit all done and in the past, the coronavirus pandemic has emerged as the most important factor for the British pound sterling so far in 2021. The United Kingdom, which identified a highly contagious mutation of Covid-19 some weeks ago, has been struggling with its worst outbreak to date. However, daily infection rates have been going down since last week, which could be a sign that the lockdowns are working. In addition, the UK recently became the first country with three approved Covid-19 vaccines: Pfizer’s, AstraZeneca’s, and Moderna’s. It’s leading the world in terms of vaccinations and is set to have some of the most vulnerable segments of its population fully vaccinated by the end of next month. Despite the high infection rates still, the United Kingdom is on a path to get rid of the coronavirus likely before any other country manages to defeat the pandemic. This is boosting the pound because the sooner Covid is gone, the faster the economy will recover.
There is nothing new with the European single currency. The latest fundamentals from the EU are stable, despite the lockdowns in place in some countries, most notably Germany. Coronavirus infection rates are also dropping across the board, though EU member states are behind the UK in terms of total vaccinations per country. It is this difference in speed that is giving the pound the advantage at the moment. Otherwise, both the GBP and the EUR are considered risky assets and benefit in equal amounts when investors have a higher appetite for risk.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8911, with the pair currently trading very close to that level, going right above and right below it. The daily support levels lie at 0.8883 and 0.8853. The daily resistances are at 0.8941 and 0.8969. The indicators of technical analysis agree in strongly recommending a sell position today.
