Weekend’s headlines suggest more work to be done in Brexit talks – Bearish GBP/USD gap?

Regarding the latest developments surrounding Brexit talks, the European Commission on Sunday said a lot of work remained to be done and added that talks with the United Kingdom will contiÄŸnue on Monday.

On Saturday, in an interview with Italian newspaper Repubblica, Nigel Dodds, deputy leader of the Democratic Unionist Party (DUP), argued British Prime Minister (PM) Boris Johnson’s proposal was unacceptable. “It cannot work because Northern Ireland has to remain fully part of the United Kingdom (UK) customs union,” Dodds said.

Confirming the lack of progress following the cabinet meeting on Sunday, “PM Johnson told his cabinet that a pathway to a deal could be seen, but there is still a significant amount of work to get there, and we must remain prepared to leave on October 31st,”the PM’s office said in a statement.  

The GBP/USD pair, which closed the week at its highest level since late June at 1.2650,  registered its largest 2-day percentage gain in more than three years in the second half of the previous week  boosted by hopes of the UK and the European Union reaching a Brexit deal ahead of the deadline. The headlines over the weekend suggest that a deal is not as close as initially thought and the pair could start the new week with a bearish gap.