- The GBP / USD pair gained positive traction on Friday and appeared unaffected by the Brexit headlines.
- The EU envoys were informed that the Brexit talks remain unresolved on three key points.
- A dovish USD price action did not influence or boost the pair.
The pair GBP/USD it maintained its intraday gains during the middle of the European session, although it lacked subsequent purchases and remained below 1.3300.
The pair managed to regain some positive traction on the last trading day of the week and built on the previous day’s bounce from levels below 1.3200. The British pound saw a slight rise following the release of better than expected UK retail sales figures and did not appear to be affected by lingering Brexit-related uncertainties.
The EU negotiating team informed envoys from the 27 member states of the bloc that the Brexit talks remain unresolved on three sticking points: a level playing field, fishing rules and state aid. Separately, an EU diplomat was quoted as saying that the gaps were only slowly narrowing on core issues, adding that there were mounting concerns about the time remaining.
It’s worth remembering that in-person talks were suspended on Thursday after a member of the EU team tested positive for COVID-19. Negotiations will now continue until next week and an agreement needs to be reached next week to facilitate translation and ratification before the end of the Brexit transition period on December 31.
On the other hand, the US dollar struggled to gain significant traction in the wake of conflicting reports on the US COVID-19 aid package. Reports indicated that the Republican and Democratic leaders of the US Senate had agreed to resume the negotiations on the coronavirus stimulus measures. The positive development, to a greater extent, was offset by the decision of US Treasury Secretary Steven Mnuchin to end part of the pandemic relief for troubled companies.
Meanwhile, concerns about the economic fallout from the new COVID-19 restrictions in several US states have fueled speculation about further monetary easing by the Fed. This, coupled with a weaker tone around to US Treasury yields, limited the dollar’s rise and continued to support the supply tone surrounding GBP / USD.
In the absence of major economic releases to move the US market, incoming Brexit-related headlines will continue to play a key role in influencing the GBP / USD pair. From a technical perspective, the bulls could still wait for a sustained move above the recent highs, around the 1.3310 region, before positioning for any further appreciation moves.
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