- GBP/USD eases inside intraday trading range above 1.3300.
- Brexit negotiations hover around key issues, a deal that could be revised after several years eyed off-late.
- BOE’s Bailey contrasts with UK Chancellor Sunak to highlight the importance of Brexit and covid-19.
- Comments from BOE’s Haskel, key risk catalysts in the spotlight.
GBP/USD prints mild gains above 1.3300, currently up 0.10% around 1.3300, while heading into Tuesday’s London open. In doing so, the Cable struggles to justify overall market optimism and increasing odds that the Brexit deal is just around the corner, with certain conditions. With further talks likely starting from Friday, comments from BOE and any inside news can entertain the sterling traders.
Although key issues like fisheries, governance and competition remain unsolved, the Telegraph came out with the news, also conveyed by the Financial Times (FT), suggesting nearness to Brexit deal with interim plans that can be edited after several years. Although the European Union’s (EU) Chief Negotiator Michel Barnier highlighted differences, markets remain hopeful of a solution as fresh talks will start from Friday in London, if no more members of Barnier’s team have covid infections.
In the meantime, BOE’s Bailey highlights Brexit as the key issue and pushes for the trade deal, like Irish Prime Minister Micheal Martin, but his paths crossroads with British Finance Minister Rishi Sunak who considers the coronavirus (COVID-19) as the key challenge. Chancellor Sunak also highlighted the need to restore public finance once the economy overcomes the pandemic.
Elsewhere, the UK-China tussle remains on the table as Foreign Secretary Dominic Raab said, per Reuters, that Britain is considering pulling its judges out of Hong Kong’s highest court.
On the other hand, vaccine hopes recently gained momentum after AstraZeneca marked a 90% effective rate for its candidate in the race of cures to COVID-19. Also boosting the market optimism could be US President Donald Trump’s nod to President-elect Joe Biden’s power shift as well as an impressive list of candidates, including ex-Fed Chair Janet Yellen, of Biden’s team.
That said, stock futures remain positive while the US 10-year Treasury yields gaining back above 0.85%. Further stocks in Asia-Pacific also benefit from the risk-on mood.
Looking forward, comments from Jonathan Haskel, a member of the Monetary Policy Committee (MPC) of the Bank of England (BoE) can offer immediate direction while news concerning Brexit, virus and US politics will be the key to watch.
Not only an ascending trend line from November 02, at 1.3262 now, but the 50-bar SMA level near 1.3240 also restricts short-term GBP/USD downside. Alternatively, the 1.3400 round-figure acts as an immediate upside hurdle for the GBP/USD buyers ahead of the yearly peak surrounding 1.3485.