GBP price, Brexit news and analysis:
- After its recent steep falls, GBP/USD has steadied around the psychologically important 1.30 mark but is still in danger of weakening further.
- This session the focus will be on emergency Brexit talks between the UK and the EU after the UK published proposed legislation to amend its divorce treaty with the EU and potentially break international law in the process.
GBP/USD outlook: further weakness?
GBP/USD looks to be stabilizing around the psychologically important 1.30 level after its recent falls from a high above 1.34 at the start of this month. However, further weakness cannot be ruled out as the post Brexit relationship between the UK and the EU next year becomes an increasingly dominant theme for Sterling traders.
As the chart below shows, GBP/USD is back at levels last seen in late July but there is little support for it ahead of the 100-day moving average at 1.2751, and the 14-day RSI is not yet showing an oversold market.
GBP/USD Price Chart, Daily Time Frame (May 25 – September 10, 2020)
Chart by IG (You can click on it for a larger image)
| Change in | Longs | Shorts | OI |
| Daily | 0% | -17% | -6% |
| Weekly | -1% | -4% | -2% |
The UK government has proposed a law to override parts of the Brexit withdrawal agreement signed by the UK and the EU in January, and has admitted that the legislation would breach international law – prompting consternation in the EU. The proposed Bill relates to trade between Great Britain and Northern Ireland, and has been seen by some political observers simply as a negotiating tactic as the UK and the EU plan their trade relationship after the Brexit implementation period ends on December 31.
However, the move has prompted emergency talks in London between European Commission Vice-President Maros Sefcovic and UK Cabinet Office minister Michael Gove, separate from the ongoing talks between EU and UK officials. The result of those talks could well determine the next move in GBP/USD ahead of Friday’s UK economic growth data for July.
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--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
