GBP : Brexit Talks Continue

(Fri, 27 Nov 2020). Trade talks between the EU and UK continue today after EU chief negotiator Michel Barnier has briefed the EU Parliament and the Member States this morning. After much confusion about whether he would make the journey or not, Mr. Barnier will travel to the UK later Friday to meet his UK counterpart David Frost in yet another attempt to break the current gridlock. Mr. Barnier will also be speaking to the EU fishing ministers today to give them the latest, regular, update on the talks. Major differences between the two sides remain over fisheries, a level playing and state aid. This weekend’s talks are seen by some in the market as make-or-break as the clock ticks down.

Sterling has been moving gradually higher against a weak US dollar over the last two months and has now run into topside resistance around the 1.3400 level. While the technical set-up remains positive with all three moving averages providing strong support, the market has crept into overbought territory, using CCI, and may need a fundamental driver for the next move. A positive outcome from the EU/UK talks should see cable take out the mid-December 2019 high of 1.3515 and move back towards the 1.3800 area, while a no-deal outcome may see the pair test the 1.2650-1.2850 zone.

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