GBP price, Brexit news and analysis:
- GBP/USD is trending lower, and EUR/GBP higher, as Sterling markets are buffeted one way then the other by headlines suggesting an EU-UK trade is likely, or unlikely.
- This makes it very difficult to trade the British Pound, although it continues to fall back after GBP/USD traded above 1.35 on December 4.
- The UK unemployment rate rose by less than expected in October but economic data are having little impact on GBP/USD or the GBP crosses.
GBP/USD will continue to be buffeted by Brexit news
GBP/USD, EUR/GBP and the Sterling crosses will continue to trade on headlines suggesting that an EU-UK trade deal is close ahead of the Brexit implementation period ending on December 31, or that the two sides remain far apart on the key issues of fishing, the level playing field and governance.
However, as the chart below shows, GBP/USD continues its broad slide lower since the pair touched 1.3540 on December 4, suggesting the risk of further losses near-term, particularly if the current Brexit talks break down.
GBP/USD Price Chart, One-Hour Timeframe (December 4-15, 2020)
Source: IG (You can click on it for a larger image)
| Change in | Longs | Shorts | OI |
| Daily | 3% | -7% | -3% |
| Weekly | 4% | -10% | -5% |
One possible outcome is that the two sides reach an agreement by year-end, allowing them to claim credit for their statecraft, but that the full text, written by lawyers, will be so convoluted it will be essentially a fudge. It is still possible though that the talks could break down, or even continue into the new year.
In the meantime, there are fears that the coronavirus pandemic is hitting the UK harder than some other countries, though this is a secondary factor for GBP. Also, very little attention is being paid currently to UK economic data.
Tuesday’s European session opened with figures showing a smaller rise than expected in the UK unemployment rate in October but the statistics were largely ignored as traders continue to focus on Brexit.
Source: DailyFX
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--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
