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Steadies After Outperforming G10 Peers On Brexit Headlines

GBP

GBP remained the best performer in G10 FX space Monday despite trimming some of its initial gains. The currency was bolstered by the news that the UK & EU decided to extend Brexit talks. Elsewhere, UK Health Sec Hancock said that London will be placed under highest-level restrictions on Wednesday and informed that British researchers have identified a new coronavirus mutation, with over 1,000 infections detected, mostly across Southeast England.

  • On the Brexit front, EU Chief Brexit Negotiator Barnier told EU ambassadors that a trade deal with the UK could be finalised as soon as this week, if the two sides manage to overcome remaining differences. Meanwhile, French junior minister for EU affairs Beaune noted that the negotiations should not be extended beyond this week, while UK PM Johnson's spokesman said that a no-deal scenario remains a "possible outcome," as "time is in very short supply."
  • GBP/USD has consolidated yesterday's gains, last trades +12 pips at $1.3336. A cross above $1.3446, which capped gains yesterday, would open up Dec 9 high of $1.3478. Conversely, a slide through Dec 14 low of $1.3265 would expose Dec 11 low of $1.3135.
  • EUR/GBP trades at GBP0.9113, little changed on the day. The initial bearish target is provided by yesterday's low of GBP0.9045 and a break here would bring Dec 10 low of GBP0.9008 into play. Bulls see Dec 14 high of GBP0.9119 as the initial resistance. Coming up next is Dec 11 high at $0.9230.
  • GBP/JPY sits +13 pips at Y138.77 at typing. A breach of the high print of Dec 9 at Y140.33 would draw attention to Dec 4 cycle high of Y140.71. Conversely, bears look at 50% retracement of the Sep 22 - Dec 4 rally/Dec 11 low at Y136.88/80.
  • UK labour market data hits the wires in the London morning, inflation figures come out Wednesday, the BoE delivers its MonPol decision Thursday, with retail sales coming up Friday.

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