Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The trend has been generally a downward one since mid-December, with a more or less uninterrupted bearish wave dominating it since January 7.The pair is currently trading at 8-month lows.
The British pound is currently riding a wave of optimism regarding the United Kingdom’s ability to tackle the coronavirus pandemic. After the discovery of a mutation of Covid-19 that is much more transmissible than the regular virus, cases have been surging in the UK for months. However, recent numbers show that the peak of infections may have been reached two weeks ago. The UK is hard at work to vaccinate its population and has surpassed 4 million vaccinations, using three different vaccines. The government is utilizing lockdowns to limit the spread of the virus any further and has been opening additional medical centers where people can get vaccinated to speed up the process. Aside from the virus, local fundamentals are looking good, indicating that the UK’s economy is not too battered by the pandemic compared to everyone else, which supports the pound.
The most important event that will affect the euro today is the European Central Bank’s policy meeting. Based on the latest trends and the information released from the bank’s previous meeting, it doesn’t seem like there will be any changes to the regulator’s stimulus or interest rate plans at present. However, investors are curious about ECB President Lagarde’s speech after the meeting, specifically whether Lagarde will say anything different from what we expect. Other than that, the euro is not appreciating quite as much as the pound is with the current modest appetite for risk among investors.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8868, with the pair currently trading below it. The daily support levels lie at 0.8832 and 0.8801. The daily resistances are at 0.8899 and 0.8935. The indicators of technical analysis agree in strongly recommending a sell position today.
