GBP/USD outlook: Cable loses ground after negative news on trade talks
Cable fell over a hundred pips on Thursday after news said that EU and UK negotiators failed to close a gap on state aid, a key element of new agreement on post-Brexit trade ties.
The sentiment was further soured on news that European Commission President will announce legal action against the UK over its plan to undercut the Brexit divorce treaty.
Data on Thursday showed that British factory activity grew for a fourth straight month in September, although more slowly than previous month that added to negative tone.
The pair posted fresh recovery high at 1.2950, driven by month-end flows, before sharp fall that already erased Wednesday’s gains and pressuring pivotal support at 1.2813 (10DMA). Read More...
GBP/USD Forecast: Bulls might now aim for a move beyond 1.3000 mark
The GBP/USD pair had some good two-way price moves on Wednesday and was influenced by a combination of diverging factors. The chaotic end of the first US presidential dented investors' appetite for perceived riskier assets and drove some haven flows towards the US dollar, which, in turn, prompted some selling around the major. The British pound was further weighed down by the BoE Governor Andrew Bailey's dovish comments on Tuesday, saying that policymakers have not ruled out the possibility of using negative interest rates. On the economic data front, the UK Q2 GDP print was revised higher to -19.8% from -20.4% estimated previously, albeit did little to impress the GBP bulls.
However, the recent optimism over a Brexit deal extended some support to the major and helped limit any deeper losses. Hopes of Brexit deal were further lifted by reports that both sides had been able to engage more closely on the contentious issues of fishing opportunities and state aid. The pair managed to find decent support near the 1.2800 mark after the BoE's chief economist, Andy Haldane downplayed expectations of negative rates in the short-term. Haldane further added that any decision on negative rates is likely to take months and would depend on cost-benefit analysis. Read More...
GBP/USD Forecast: Brexit pummels pound, US politics could push it below 1.28
"Breach of the obligation of good faith" – these words by the EU are not only rhetoric but legal action. Ursula von der Leyen, President of the European Commission, announced that the bloc has sent a formal notice to the UK in response to the Internal Market Bill. That is the first move before taking Britain to court.
The announcement follows the expiry of the EU's ultimatum to the UK over the legislation that knowingly violates the Brexit Withdrawal Agreement that Prime Minister Boris Johnson signed last year. Read More...
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