Brexit talks between the UK and the European Union remain stalled, as the sides remain far apart on a number of key issues. The “flavor of the month” which is currently grabbing the headlines, is the issue of fishing rights. When the UK was part of the EU, European boats had free access to British fishing grounds. Prime Minister Boris Johnson wants to take back control of its waters in a post-Brexit era, but the Europeans are crying foul. The European Union has made clear that London cannot expect free access to European markets while limiting European boats from fishing in British waters. In other words, Brussels is insisting that the status quo for fishing rights continues as part of any trade deal. With the British fishing industry struggling, the issue has become a hot button, symbolizing British sovereignty when the UK cuts the cord with the EU.
Michel Barnier, chief negotiator for the EU in the Brexit talks, had a warning for the UK earlier this week. Barnier set a deadline of October 31 for London and Brussels to conclude a free-trade agreement. With temperatures rising on both sides of the Channel, the deadlock over Brexit could weigh on the British pound as the official deadline of December 31, 2020 edges ever closer. That is the end of the current interim period – without a deal in place by the end of the year, the UK is out, but without a trade deal between the EU and the UK.
GBP/USD is currently trading at 1.3132, up 0.28% on the day. The pair posted slight gains in the Asian session and is flat in European trade
- 1.3154 is the first line of resistance. Above, there is resistance at 1.3207.
- 1.2996 is providing support, just shy of the symbolic 1.30 level. This is followed by support at 1.2891. Immediately lower, the 20-day MA is a support line at 1.2870
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