GBP price, Brexit news and analysis:
- Talks on the relationship between the EU and the UK after Brexit remain stalled and that could begin to weigh on GBP after its recent gains against EUR and USD.
- Michel Barnier has said he is worried and disappointed by the lack of progress in the negotiations and has said that end-October is a strict deadline.
GBP/USD outlook deteriorates
The outlook for GBP/USD is worsening after its failure Tuesday to top the important 1.35 resistance level. To an extent, its subsequent decline has simply reflected a rally in the US Dollar as market sentiment has deteriorated. However, GBP traders will likely become increasingly focused in the days ahead on a continuing lack of progress in the ongoing talks between the EU and the UK on their relationship post Brexit – a negative factor for Sterling.
GBP/USD Price Chart, Daily Time Frame (June 4 – September 3, 2020)
Chart by IG (You can click on it for a larger image)
Speaking at a seminar Wednesday, chief EU negotiator Michel Barnier said he was “worried and disappointed” by the lack of progress in the negotiations and said there is a “strict deadline” of end-October to agree a trade deal.
His comments were dismissed by the UK as a “deliberate and misleading caricature” of the UK’s proposals but the ramping up of the rhetoric will still likely weigh on GBP/USD, and benefit EUR/GBP, as the deadline approaches.
Note, though, that EUR could be held back, limiting any strong gains for EUR/GBP, by suggestions that the European Central Bank does not want to see EUR/USD above the 1.20 level. Its chief economist Philip Lane noted earlier this week that the exchange rate “does matter” to the ECB.
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— Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex