GBP/USD consolidates gains above 1.3100, Brexit negotiations in focus

• GBP/USD eases from the intraday top of 1.3137 but prints four-day winning streak.
• The seventh round of Brexit talks becomes the last scheduled one even if negotiations to continue in September.
• British representatives may keep the head high while targeting the deal next month, EU has tough standards as well.
• US-China tussle, virus woes play background music amid a light calendar.

GBP/USD seesaws in a choppy range between 1.3120 and 1.3137, currently around 1.3128, while heading into the London open on Tuesday. Even so, the Cable rises for the fourth day in a row ahead of the key seventh round of EU-UK talks over post-Brexit ties.

While the BBC quotes UK PM Boris Johnson’s previous comments to keep the hopes of a trade deal next week, the Daily Mail reported that Britain won’t accept aligning to rules of the European Union at tomorrow’s round of post-Brexit talks. On the other hand, the UK Express relies on a fisheries expert mention that the European Union (EU) fishermen may inevitably clash with British fishermen regardless of whether a fishing trade deal is agreed between the UK and Brussels.

Although today’s talks become the last scheduled meet, policymakers earlier showed readiness to extend the discussions till September if needed. After the last round in London, EU chief negotiator Michel Barnier said, as per the BBC, that an agreement would be needed by October “at the latest” so it could be ratified before the current post-Brexit transition period ends in December. Both the parties allege each other while citing inabilities to agree over the key issues like fisheries, level playing field and jurisdiction rules to name a few.

Elsewhere, UK Chancellor Rishi Sunak is forced to extend the furlough scheme amid rising unemployment rate and hence reopened support scheme for self-employed. Furthermore, news that the Imperial College London’s coronavirus (COVID-19) vaccine candidate is ready for the next phase portrays the Tory government’s efforts to combat the pandemic.

On the other hand, the US and China continue to jostle over one issue or the other. Recently, America added 38 Huawei facilities to the US’ economic blacklist while also arresting a Chinese spy.

Amid all these catalysts, the market’s risk-tone sentiment struggles for clear direction as stocks in Asia trade mixed whereas the US 10-year Treasury yields stay downbeat near 0.38%. Further, S&P 500 Futures also remain on the front-foot after refreshing the six-month high.

Considering the lack of major data/events, traders will keep eyes on the Brexit and COVID-19 news for fresh impetus. Additionally, the US housing market data may offer an extra direction to confirm the pair’s moves.

Technical analysis

Unless breaking 1.3200, GBP/USD prices remain vulnerable to revisit Wednesday’s low around the 1.3000 threshold.