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GBP Suffers From COVID Spread Reaction, No Progress in Brexit Talks.

GBP
MNI (London)
  • Friday saw long GBP positions pared back ahead of the weekend EU 'deadline' for a Brexit trade agreement (deadline set for deal to be ratified by Dec31 in the EU parliament).
  • GBP/USD extended its correction away from Thursday's high of $1.3624 to $1.3472 Friday though managed to close at $1.3514.
  • Little news on negotiation progress ahead of the Sunday midnight 'deadline', with agreement not forthcoming at the set hour, along with announced borders closures for travel from the UK, due to a virulent COVID strain, saw GBP under pressure from the off in Asia.
  • GBP/USD dropped to $1.3402 in opening trade, with recovery efforts capped below $1.3450.
  • General move to pare USD short positions kept pressure on, which along with a fiscal stimulus agreement in the US, saw EUR/USD break below $1.2200, taking GBP/USD through $1.3400 to $1.3336 before settling between $1.3350/70 into Europe.
  • Underlying tone for GBP remains soggy. Support $1.3336, $1.3322(61.8% $1.3135-1.3624), $1.3300, $1.3280. Resistance $1.3370, $1.3400.
  • UK CBI retail sales at 1100GMT provides domestic data interest but Brexit trade negotiations (talks continue despite deadline pass) and UK COVID spread reaction provide the main directional impetus for GBP.
  • MNI Techs: GBPUSD traded higher last Thursday to extend the climb off the Dec 11 low of 1.3135. The pair however has started this week on a softer note extending the pullback from 1.3624, Dec 17 high. A deeper sell-off would expose 1.3246, the 20-day EMA with the key short-term trend support located at 1.3135, low Dec 11. On the upside, a break above 1.3624 would confirm a resumption of the uptrend.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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