- EUR / GBP remains stuck around the 0.8375-0.8430 range, with no clear direction.
- Euro zone: The fourth wave of COVID-19 could seriously affect Europe as Germany prepares for the possibility of enacting lockdowns.
- Brexit: The EU and the UK appear to be far from reaching a deal in the short term.
The EUR/GBP it cuts some weekly losses during the day, up 0.06%, trading at 0.8411 at the time of writing. In Thursday night’s session, the euro gained some ground against the British pound, ingored the problems of the fourth wave of COVID-19 in Europe, while the negotiations between the EU and the United Kingdom appear stalled regarding to Brexit.
The fourth wave of COVID-19 is severely impacting Europe, with cases increasing to record levels. Austria, which reimposed a two-week lockdown, and Germany, which began imposing stricter rules amid the country’s worst COVID-19 surge, are studying mandatory vaccine measures in both countries. Additionally, Slovakia, the Czech Republic, the Netherlands, and Hungary reported new highs in daily infections as winter approaches Europe.
Speaking of Brexit nerves that could weigh on the British pound, a UK government spokesman said the British prime minister had told the Irish prime minister that he was concerned about a substantial gap that continued to exist between the UK and the UK. EU on the implementation of the Northern Ireland Protocol. Furthermore, the French Fisheries Association threatened to take action on Friday, blocking French ports and the Channel Tunnel, as the UK has hesitated to get what they wanted. That would exacerbate the supply chain disruptions that are already plaguing the UK economy.
That said, coupled with central bank policy divergence, it appears to favor sterling bulls as the Bank of England prepares to tighten monetary policy conditions. However, the nervousness of Brexit could limit any downward movement in the EUR / GBP pair.
EUR / GBP Price Forecast: Technical Outlook
The EUR / GBP daily chart shows the crossover in a range between the 0.8370-0.8430 region, without breaking above / below the range. Based on the daily moving averages (DMA), it favors a bearish bias, as the DMAs are well above the spot price, sloping down, indicating that selling pressure could be increasing.
Also, the Monday and Wednesday candles left two large wicks on top of the real bodies, suggesting that sellers are under control, despite the strong support found around the 0.8370 area.
In the continuation of the downtrend, the first support would be the low of November 22 at 0.8380. A breach of the latter would expose the January 2020 lows around 0.8281.
On the other hand, the first resistance would be the low swing resistance of Aug 10 at 0.8449, followed by the dynamic resistance of the 50 DMA at 0.8492.
Technical levels
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