The British pound is down against the US dollar on Thursday as EU trade uncertainty weighed on Sterling after the UK released its mandate for the upcoming trade talks. Elsewhere the dollar’s haven status was being undermined by fears that a coronavirus outbreak could happen next in the United States.
GBP/USD was lower by 32 pips (-0.25%) at 1.2873 with a daily price range of 1.286 to 1.295 as of 2.30pm GMT. The currency pair dropped to new weekly lows before a short afternoon rebound which ran into sellers at 1.29 sending it back to lows of the day. Weekly losses stand at -0.79%
Trade deal uncertainty slows down the GBP
The pound-dollar exchange rate failed to move beyond 1.30 earlier in the week amid overall Brexit trade deal uncertainty and continues to move lower as both sides set out their negotiating mandates. If investors had still been holding out some hope that the UK might extend the negotiations come June, then today’s headlines have probably put that idea to bed. It would appear 10 months is the only timetable forex traders need to know to determine if a UK-EU trade deal can be done.
On Thursday, the UK released its own document prioritising what it wants from the talks. The pound fell when the statement “The UK will rely on World Trade Organisation rules under an arrangement with the EU similar to Australia’s if progress on a comprehensive deal cannot be made” went out across newswires. Sky News interpreted the statement in its headline “UK prepared to walk away in June if not enough progress made.”
The dollar and US equity futures fell late on Wednesday when the Centre for Disease Control (CDC) announced there had been a case of ‘unknown origin’ in California. So far, the US government does not seem to have the full confidence of markets. The announcement that Vice President Pence will head up a coronavirus task force in the United States, which will meet for the first time on Thursday at 7.30pm GMT was not well-received by investors who have since sold US assets including the dollar.
