GBP/USD: Sterling Stalls at Weekly Lows

The British pound was lower against the US dollar on Thursday with Brexit uncertainty on the one hand and positivity about the US economy on the other keeping the exchange rate pegged just below the key 1.30 level.

GBP/USD was lower by 32 pips (-0.24%) at 1.2970 with a daily price range of 1.2953 to 1.3003 as of 2.00pm GMT. An early failure to break above 1.30 saw the currency pair slip into small daily losses which add to the -0.27% decline on Wednesday and a weekly loss of -1.77%

GBP/USD – FX traders seem to be bracing for phase two of Brexit

FX traders seem to be bracing for phase two of Brexit, namely negotiations for an EU/UK trade deal. As has been the case all along, the condition for the UK gaining unfettered access to EU markets is following EU rules. Of course the UK wants as much access as possible and to follow as few rules as possible and the EU wants vice versa.

The latest front that has opened in Brexit appears to be financial services. So far there is not much in the way of detail about possible changes to MiFID but the idea that a key UK economic sector like financial services might be sacrificed for Brexit is hurting sentiment towards the British currency. Without much in the way of heavy-hitting economic data left this week, the fate of the GBP/USD exchange rate probably lies with comments on Britain’s future trading relationships.

Regarding trade negotiations between the United Kingdom and the United States, British Trade Secretary Liz Truss said in a written statement to parliament on Thursday that “In a trade deal with the US, the UK is seeking far-reaching and mutually beneficial tariff reductions.”

The US dollar

The US dollar was mostly higher against major currencies on Thursday, benefiting from some semblance of political stability and a better position in international trade. Donald Trump will be President of the United States until November at a minimum after being acquitted in his impeachment trial in the US Senate. Additionally, China announced it has halved tariffs on $75bn worth of US goods exported to China as part of the phase one trade deal.

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