British Pound (GBP) Latest: GBP/USD Under Pressure, EU-UK Trade Talks Need a Reboot
British Pound (GBP) Forecasts, Charts and Analysis:
- EU/UK trade talks going nowhere, fast.
- Never say never on negative UK interest rates.
GBP/USD Remains Under Pressure as EU-UK Trade Talks Stall
The UK and the EU trade talks are currently at a stalemate with both sides seemingly unwilling to budge from their mandates. The latest round of talks between the two sides ended last week with very little progress made and with the UK refusing to sanction any further extension of the transition period, the outlook remains increasingly uncertain. The UK this week will publish draft legal texts ‘so that the EU member states and interested observers can see our approach in detail’ in an effort to reboot discussions between the two sides. The reaction to these draft texts will direct Sterling over the short-term.
The Bank of England chief economist Andy Haldane said this weekend that the central bank is considering all options in an effort to boost the UK economy and did not rule out negative interest rates or buying riskier assets. Speaking to the Daily Telegraph, Haldane said ‘the economy is weaker than a year ago and we are now at the effective lower bound, so in that sense it’s something we’ll need to look at - are looking at – with somewhat greater immediacy. How could we not be?’
GBP/USD fell by around 350 pips last week and broke through multi-week support, creating an ominous series of lower highs and lower lows. The pair also fell through both the 20- and 50-day moving averages, adding to the negative sentiment in the market. The pair currently trade either side of the 38.2% Fibonacci retracement level at 1.2095 and with little price action below here, the 23.6% Fib level at 1.1834 is likely to be the next level of support. The oversold nature of GBP/USD may help support the pair in the short-term but Sterling needs some good macro news to stem any further losses.
GBP/USD Daily Price Chart (December 2019 – May 18, 2020)
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