GBP/USD pares early losses, trades with modest gains above 1.2920

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  • GBP/USD fluctuated sharply on Brexit headlines on Friday.
  • US Dollar Index stays in the red after mixed US data.
  • GBP/USD remains on track to snap a two-week winning streak.

After moving sideways near 1.2900 during the Asian session, the GBP/USD pair rose to a daily high of 1.2962 in the early European morning. However, with the GBP coming under heavy selling pressure on British Prime Minister Boris Johnson’s Brexit commentary, the pair dropped all the way to 1.2866.

Nevertheless, the risk-on market environment made it difficult for the greenback to find demand in the second half of the day and allowed GBP/USD to erase its losses. As of writing, the pair was up 0.12% on the day at 1.2929.

“Given the EU have refused to negotiate seriously, I have concluded we should get ready for an Australia-style deal,” UK PM Johnson said on Friday. Additionally, a government spokesman said that trade talks with the EU were over. However,  European Commission President Ursula von der Leyen reiterated that the EU continues to work for a deal but not at any price.

USD remains on the back foot as Wall Street rebounds

The data from the US showed on Friday that Retail Sales in September surged by 1.9%. This reading beat the market expectation for an increase of 0.7% by a wide margin. On a negative note, the Federal Reserve reported that Industrial Production in September contracted by 0.6%.

These data failed to impact the market sentiment in a meaningful way and Wall Street’s main indexes opened in the positive territory. At the moment, the Dow Jones Industrial Average and the S&P 500 are up 1% and 0.65%, respectively, while the US Dollar Index is losing 0.1% at 93.68.

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