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GBP/USD has been edging higher ahead of a critical Brexit summit later in the day. Britain’s compromise on the previous agreement gives hope, yet disagreements remain, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“UK Prime Minister Boris Johnson heads to an evening encounter with European Commission President Ursula von der Leyen. The two leaders spoke on the phone several times in recent days but have failed to reach a compromise on the issues remaining to conclude post-Brexit relations – fisheries, governance, and the level-playing field.”

“Sterling edged up on Tuesday after Britain dropped controversial clauses in the Internal Markets Bill (IMB). The concession allowed both sides to announce a protocol for Northern Ireland – yet that only completes the implementation of the 2019 Withdrawl Agreement – not trade details from 2021 onward.”

“Michel Barnier, Brussels’ Chief Negotiator, said that the chances of a deal are ‘very slim.’ If he is right, sterling could dive once dinner is over. On the other hand, the leaders may cede ground and allow for a breakthrough.” 

“Outside the neverending Brexit saga, the safe-haven dollar is on the back foot as Republicans and Democrats seem to be inching closer to a fiscal stimulus accord. The GOP seems ready to accept a $900 billion relief package, yet the parties differ on the details. Headlines from Washington are eyed.”