He GBP/USD it fell further and bottomed at 1.2889, reaching a new daily low. The pound then rallied to 1.2935 as the rally in the US dollar lost momentum across the board.
Johnson will decide on Friday
The pound is also falling against the euro and the Swiss franc ahead of a critical day for Brexit. European Union leaders in Brussels issued a statement on Thursday in which they raised concerns that progress on key issues of concern is still not enough to reach a deal. They called London to do what was necessary to reach an agreement.
Prime Minister Johnson said he will make a decision on Friday at the end of the summit on whether to continue negotiations or not. Your decision is sure to move the pound crosses.
With respect to the US, the data released Thursday was mixed. Initial jobless claims rose to 898,000 instead of falling to 825,000 as expected. On the upside, the Philadelphia Fed jumped to 32, significantly above the market consensus.
The US dollar maintained its gains after the data, supported by the slide in global markets. On Wall Street, the Dow Jones is far from lows, falling just 130 points or 0.45% and the Nasdaq fell 1.25%. The lack of agreement between the White House and Democrats for more fiscal stimulus weighed on market sentiment. Recently, the minority leader of the US House of Representatives, McCarthy, said that he does not expect a deal before the election “while Pelosi is involved.”
From a technical perspective, GBP / USD technical indicators are starting to favor the downside in the near term. To clear the way for further losses, a firm break below 1.2900 is needed. If the pair manages to stay above 1.2870, a recovery to 1.3000 should not be ruled out.
Credits: Forex Street