- GBP/USD gained positive traction on Friday and seemed unaffected by Brexit headlines.
- EU envoys were briefed that Brexit talks remain unresolved on three key sticking points.
- A subdued USD price action did little to influence or provide any impetus to the major.
The GBP/USD pair held on to its intraday gains through the mid-European session, albeit lacked any follow-through buying and remained below the 1.3300 mark.
The pair managed to regain some positive traction on the last trading day of the week and built on the previous day’s rebound from sub-1.3200 levels. The British pound got a minor lift following the release of better-than-expected UK Retail Sales figures and seemed rather unaffected by persistent Brexit-related uncertainties.
The EU negotiating team briefed envoys of the bloc’s 27 member states that Brexit talks remain unresolved on three sticking points – level playing field, fisheries and state-aid rules. Separately, EU diplomat was quoted saying that gaps were only slowly shrinking on core issues and added that there were growing concerns about the time left.
It is worth recalling that in-person talks were suspended on Thursday after a member of the EU team was tested positive for COVID-19. Negotiations will now continue to next week and a deal needs to be struck next week in order to facilitate the translation and ratification before the end of Brexit transition period on December 31.
On the other hand, the US dollar struggled to gain any meaningful traction on the back of conflicting reports about the US COVID-19 relief package. Reports indicated that US Senate Republican and Democrat leaders had agreed to resume negotiations on coronavirus stimulus measures. The positive development, to a larger extent, was offset by the US Treasury Secretary Steven Mnuchin’s decision to end some of the pandemic relief for struggling businesses.
Meanwhile, concerns about the economic fallout from new COVID-19 restrictions in several US states have been fueling speculations for additional monetary easing by the Fed. This, along with a weaker tone surrounding the US Treasury bond yields, capped the upside for the greenback and remained supportive of the bid tone surrounding the GBP/USD pair.
In the absence of any major market-moving economic releases from the US, the incoming Brexit-related headlines will continue to play a key role in influencing the GBP/USD pair. From a technical perspective, bulls might still wait for a sustained move beyond the recent swing highs, around the 1.3310 region, before positioning for any further appreciating move.
Technical levels to watch
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