GBP/USD Easing Ahead of EU Leaders’ Summit

GBP price, Brexit news and analysis:

  • A summit of EU leaders today is seen as crucial as the final deadline approaches for a deal between the EU and the UK on their relationship after the Brexit transition period ends on December 31.
  • Michel Barnier is due to brief the EU on progress tomorrow and the next two days will therefore likely determine whether there will be a minimal skeleton deal or no deal.
  • Headlines will continue to batter GBP/USD and any signs of progress will benefit it while no-deal would likely lead to more selling.

GBP/USD easing as EU leaders prepare to meet

GBP/USD and the GBP crosses will again be battered by Brexit headlines near-term as the European Council meets today, bringing European Union leaders together via video conference. Top of the agenda will be the EU response to the Covid-19 pandemic but the future trading relationship of the EU and the UK after the post-Brexit implementation period ends on December 31 is bound to be discussed too.

For GBP/USD, any headlines suggesting a deal is close – even if it is a bare-bone trade agreement – will likely be positive for the pair while any suggestion that a deal remains far away would doubtless be negative.

GBP/USD Price Chart, 10-Minute Timeframe (November 18-19, 2020)

Chart by IG (You can click on it for a larger image)

Barnier on Brexit

As the chart above shows, GBP/USD is currently easing back but the exchange rate remains near the middle of an upward-sloping channel that has been in place for almost two months. For that advance to continue traders will need to see progress in the trade talks and in that context the briefing by chief EU negotiator Michel Barnier will be important.

Barnier is due to brief European capitals Friday and it is not impossible that he will pave the way for a trade deal to be announced early next week, although that still remains in the balance. Ahead of this, reports have suggested that some EU leaders will demand today that the European Commission publishes its plans for no-deal just in case.

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— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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