The GBP/USD pair is wavering today after the overnight meeting between Boris Johnson and Ursula von der Leyen in Brussels. It is trading at 1.3367, which is 1.35% below the year-to-date high of 1.3540.
No progress on Brexit
The highly-anticipated meeting between Johnson and Ursula ended with only a commitment to accelerate talks between the two sides.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
The two agreed that they should continue engaging as they try to reach a compromise. They then asked their team members to accelerate the talks, with the next deadline being on Sunday.
With both sides under intense pressure, there’s a possibility that a deal will remain evasive. The key outstanding issues are about fisheries, fair trade, and governance of the deal.
On fisheries, the UK wants to limit the number of European boats in its waters. This is an important issue since countries like France catch most of their fish from UK’s waters.
On fair trade, the UK wants to set its own rules that are independent from those from the European Union. In its part, the EU insists that two sides should collaborate to reduce unfair trading advantage.
A lot is at stake as talks continue because of the large trade volume between the two sides. In 2019, they did trade worth more than £600 billion. The UK sold more than 45% of its goods to the EU, which puts Johnson at a lot of pressure. Similarly, the large size of goods the EU sells to the UK, coupled with the significant supply chains will also put EU leaders on edge.
Meanwhile, the GBP/USD will today react to the UK GDP, industrial, and manufacturing production data. Economists believe that the data will show that production eased slightly in November because of the lockdowns. The pair will also move mildly in response to the US CPI data.
GBP/USD technical outlook
The GBP/USD is trading at 1.3367. On the daily chart, the pair is being supported by the ascending green trendline and the 25-day exponential moving averages. Also, the Relative Strength Index (RSI) and stochastic oscillator have started moving downwards.
Therefore, in the near term, I suspect that the pair will remain in the current range as traders wait for any progress on Brexit. If there is a potential deal, the overall outlook is bullish for the pair, implying that it may rise above 1.3500. You can take advantage of this volatility by using one of the high leverage forex brokers.
Source link