- GBP/USD falls from a three-week high on Tuesday.
- Brexit stand-off pulls down the pair.
- Greenback in demand as Trump stalls talks.
GBP/USD failed to move further past the 1.3000 psychological level and witnessed an intraday sell-off from three-week highs. The turnaround in the mood followed the reports that the European Union is not likely to offer concessions to the UK ahead of the Brexit deadline next week. The EU calculates that the UK Prime Minister Boris Johnson wouldn’t walk out without a deal even if he let the talks drag onto a later date.
The perception that the EU wouldn’t budge much on its demands even at the risk of Johnson pulling out of the discussions is gaining ground.
The risk-off mood was further accentuated by the unexpected stop of stimulus-bill discussions with the democrats by Trump. The abrupt action by the Republicans triggered worries of an economic slump; the equities sold off and attracted inflows to the dollar as a haven-linked currency. GBP/USD weakness continued as the dollar gained, resulting in a fall of 140 pips from the daily high. The pair closed the trading at the lower-end of its daily trading range. The selling didn’t continue today, and GBP/USD bounced back in the Asian session.
The pair was trading near the 1.2900 region ahead of the European open. The economic dockets in both the UK and the US are light; traders will depend on the broad risk sentiments and the strength of the dollar to determine the day’s action. Nevertheless, the release of the latest FOMC meeting minutes could invite some eyeballs and trading activity in the market.