GBP / USD capped at 1.2937, pulls back to test 1.2900 area

• GBP / USD fails to bounce above 1.2937 and falls to the 1.2900 zone
• The pound sinks as hopes for a Brexit deal deteriorate.
• Westpac sees GBP / USD trapped between 1.27 and 1.32.

The British pound looks heavy on Thursday as previous hopes for a Brexit deal with the EU deteriorate. He GBP/USD It has depreciated about 1% on the day and is testing 1.2900 at time of writing.

The obstacles of the Brexit deal hurt the pound

The pound has given up Wednesday’s gains against the US dollar as investors reassess the chances of significant gains in the Brexit negotiations. With the obstacles between the UK and the EU becoming more apparent, namely differences over fishing and fair competition and dispute resolution issues, the market is beginning to anticipate a watered-down deal, should there be one. .

Beyond that, the USD has been propelled across the board in a general race for safety. Investor disappointment regarding the remote chances of a fiscal stimulus in the US and growing concerns about the economic impact of tighter restrictions to curb the second wave of coronavirus have crushed risk appetite, fueling demand for safe havens like the US dollar and the yen. .

GBP / USD: Trapped between 1.27 and 1.32 – Westpac

On a technical level, Westpac’s currency analysis team sees the GBP / USD as trading between 1.27 and 1.32: “This week’s EC summit may not find a major breakthrough, but it may allow further talks to begin. intense about the details and thus leading to a possible deal over the next month. However, uncertainty remains high (…) Within the progress in post-Brexit trade or in the cases of COVID-19, the GBP / USD will be in the range (1.27-1.32) “.

Additional technical levels