Today our focus will remain on Europe as we take a look at the EUR/GBP currency pair. The trend of this pair appears to still be within the downward wave that began on January 7. However, the exchange rate has become choppy over the past ten days, with smaller ups and downs.
The British pound seems to be among the assets that benefit from risk-on sentiment the most at present. The coronavirus outbreak in the United Kingdom, which is struggling with the more highly contagious variant of the disease, seems to be calming down. In addition, the UK, armed with three approved vaccines, is currently leading the world in terms of total vaccinations against Covid-19. There is some controversy due to the government’s plans to delay the second dose of the vaccine by 12 weeks instead of the recommended 3-6 week gap in order to provide a first dose for more people. Though medics have expressed concerns over how the longer delay might affect the efficacy of the vaccines, the partial protection that even one dose allows (which is around 50% for the Pfizer and Moderna drugs) is helping in boosting the prospects that the UK will defeat the pandemic sooner than its counterparts. Thus, the British pound is riding high and outperforming the euro, among other currencies.
The overall outlook of the European single currency is not bad. If there is more optimism among investors that the coronavirus pandemic will slow down soon and that US President Biden will get his stimulus bill through successfully, the prospects of the global economy will massively improve. This, in turn, is leading to increased interest in risky assets like the euro. But at the moment risk appetite is not too strong and the euro is losing to the pound.
In terms of the daily chart, today we have a pivot point for the pair located at 0.8839, with the pair currently trading above it. The daily support levels lie at 0.8819 and 0.8790. The daily resistances are at 0.8868 and 0.8888. The indicators of technical analysis agree in strongly recommending a sell position today.
