- GBP is being supported by hopes of a soft Brexit.
- All eyes will be now on UK wage data on Wednesday.
GBP/USD is now trading around 1.4007, in the New York session, almost unchanged (+0.05%) daily basis, on hopes of a soft Brexit offsetting a broader recovery in the greenback. As par unconfirmed reports, EU Parliament is to call for Britain to have privileged single market access even after Brexit.
EU wants to negotiate an "association agreement" which could give Britain a "privileged" single market access and membership to EU agencies. On the other side, as par EU chief negotiator, UK can get a Canadian type of free trade agreement with EU at maximum.
Earlier on Tuesday, the GBP was under pressure from various Brexit squabbling. As par some other reports, the UK is said to have a secret plan to withhold Brexit payments if the EU refuses to provide Britain with a desirable trade deal. The former leader of PM May’s conservative party Smith said: “either the EU gives us a trade deal or they won’t get any money at all”.
Elsewhere, as per another report, Netherlands government has linked its decision to activate hard Brexit plan amid a lack of clarity from the UK.
Meanwhile, Brexit Secretary David Davis will reassure the European Union that the UK won’t try to undercut the bloc by tearing up regulations after the split, making the case for mutual trust between regulators on each side. Davis also says Brexit that a deal by the end of the year is on the cards. Britain will remain a dynamic and open country post-Brexit. British and EU companies should not be able to merge and reduce consumer choices. Britain and the EU should both respect fair trade and open competition. He is certain that Britain and the EU can get the Brexit deal right.
Amid all these Brexit squabblings, technically, GBPUSD now needs to sustain above the 1.4160 zone for a further rally towards 1.4277-1.4343 and 1.4362-1.4452 and further to 1.4645/1.4670-1.4855/1.5008 zone; otherwise, sustaining below 1.41500 areas, it may fall towards 1.39150-1.38350 and 1.37380-1.36150 and further to 1.35230-1.33120 zone in the coming days.
Apart from politics, the focus may be also in economics on Wednesday on UK’s job data, especially on real wage growth.
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