- Germany’s Merkel says they will think about practical solutions to backstop.
- UK PM Johnson’s office reiterates no Brexit deal unless WA is reopened.
- CBI data shows UK manufacturing sector recovered slightly in August.
The GBP/USD pair came under renewed bearish pressure during the European trading hours and slumped to a daily low of 1.2066. Just when it looked like the pair had gone into a consolidation phase below the 1.21 handle, fresh headlines surrounding the Irish backstop issue allowed the British pound to gather strength against its major rivals. Following a spike to a session high of 1.2182, the pair retreated slightly and was last seen trading at 1.2151, adding 0.21% on a daily basis.
Will EU soften its tone on Brexit?
Responding to British Prime Minister Boris Johnson’s letter to the EU explaining the UK’s position on Brexit earlier today, the EU said that they regret the fact that the UK did not provide any concrete proposals for alternative arrangements to replace the Irish backstop and reiterated that the Withdrawal Agreement will not be reopened.
Reacting to the EU’s statement, PM Johnson’s spokesman said that their position was unchanged explaining that there was no prospect of a Brexit deal unless the Withdrawal Agreement was renegotiated.
Later in the day, while commenting on the backstop issue, German Chancellor Angela Merkel said that backstop was a question of the political declaration on future ties rather than the Withdrawal Agreement, reviving hopes of the EU making concessions to avoid a no-deal Brexit. Furthermore, “There are tiny hints in Whitehall that in back channels EU & some member states hint at concessions on backstop,” ITV’s political editor Robert Peston tweeted out to keep the hopes alive and provided an additional boost to the GBP.
On the other hand, the Greenback stays relatively quiet amid a lack of significant macroeconomic data releases from the US and major developments regarding the US-China trade dispute, allowing the GBP’s market valuation to drive the pair’s action. As of writing, the US Dollar Index was down 0.1% on the day at 98.26.
Meanwhile, in its latest monthly Industrial Trends Survey, the Confederation of British Industry (CBI) today noted that the manufacturing output in the UK stabilised in three months to August.
Technical levels to consider
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