- GBP / USD is once again struggling to capitalize on its intraday rally to the 1.3400 area.
- The anxiety around Brexit prevents investors from opening new bullish positions and limits the rise of the pair.
- A subdued demand for the USD could help limit the slide amid the Thanksgiving holiday.
The pair GBP/USD has rapidly retraced around 45 pips at the start of Thursday’s European session and has fallen to daily lows around the region of 1.3355. At time of writing, the pair is recovering slightly from that level but is still negative on the day, around 1.3370.
The pair has continued with their struggles to overcome key resistance near round 1.3400 level and witnessed an intraday pullback on Thursday amid persistent uncertainties related to Brexit. In the latest Brexit-related news, British Finance Minister Rishi Sunak has said that negotiations are still ongoing and that he remains hopeful that a deal can be reached.
The comments, however, have done little to impress the bulls due to the absence of significant progress on key points: the so-called level playing field, fishing and the rules on state aid. It’s worth reporting that European Commission President Ursula van der Leyden said on Wednesday that disagreement over access to Britain’s fishing waters continues to block progress.
On the other hand, the British Prime Minister, Boris Johnson, reiterated that the UK’s position on fisheries has not changed and that they will not request more time to negotiate the trade agreement with the European Union. With very little time left before the Brexit transition period ends on December 31, the deadlock turns out to be a key factor limiting the rise of the GBP / USD pair.
Despite the anxiety around Brexit, the fall remains supported, at least for the moment, amid optimism about a possible coronavirus vaccine. This, coupled with a subdued demand for the US dollar, has offered some additional support to the GBP / USD pair. The USD fell to its lowest level in more than two months amid speculation of further easing by the Fed.
Data released on Wednesday showed an unexpected jump in initial weekly jobless claims, suggesting that the imposition of new restrictions due to COVID-19 was undermining the job market recovery. Additionally, the minutes of the FOMC meeting on November 4-5 revealed that lawmakers debated a number of options to modify the bond purchase program to support economic recovery.
Meanwhile, investors are likely to refrain from opening aggressive positions and prefer to wait for further news on Brexit before positioning themselves in a firm direction. Furthermore, relatively small liquidity conditions due to the US Thanksgiving holiday leave the pair at the mercy of Brexit news amid the absence of economic releases.
GBP / USD technical levels
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