GBP/USD likes the sound of silence from Brexit talks, several sideshows in play

GBP/USD has been attempting recovery after falling from the highs. After intense non-stop reports from the Brexit negotiations, the darkness and silence are likely a positive sign of progress, which may offer a buying opportunity, FXStreet’s Analyst Yohay Elam briefs.

Key quotes

“The sound of silence is unlikely to last for too long and Brexit updates may surface on Tuesday. Another glimmer of hope comes from reports suggesting the EU and the UK have come somewhat closer on the thorny Level-Playing Field topic, which defines how British divergence from EU rules affects access to the bloc’s single market.” 

“Markets are somewhat more gloomy after the UK announced London would enter severe Tier 3 restrictions on Wednesday. The economic hit to the mega-city will probably be significant, yet that was expected. Perhaps more worrying was the suspicion that a more contagious strain of the virus is spreading in the UK – albeit probably not more deadly nor vaccine-resistant.” 

“UK labor market figures were mixed. The unemployment rate edged up to 4.9% in October, better than expected, while jobless claims disappointed with a jump of 64,300 in November, worse than projected. The figures offset each other and had little impact on the pound.”

“US fiscal stimulus talks have been muddling on in recent days but may receive fresh impetus. Senate Majority Leader Mitch McConnell called for a deal after remaining mostly silent. His move follows the formal election of Joe Biden as America’s 46th President. Progress on a $900 billion bill would boost sentiment and weigh on the safe-haven dollar.”

“Momentum remains to the downside but is waning. Support awaits at the daily low of 1.3308, followed by 1.3225, which was a swing low last week. Resistance is at 1.34, which capped cable in late November, followed by 1.3445, Monday’s high.”