Pound Jumps as US 10-year yield drops
On Wednesday, the pair is trading at 1.3202, down 0.27% on the day. The British pound roared on Tuesday, as the US dollar was the pound’s punching bag for the day. GBP/USD jumped 1.02%, its strongest one-day gain since June 1st. The pair touched a high of 1.3267, a level not seen since December 2019. There was no significant data out of the US or the UK on Tuesday, and GBP/USD gained ground as the 10-year US yield fell for a third successive day. As well, the logjam in Washington, DC over the fiscal stimulus package has dampened sentiment for the US dollar.
Brexit talks continue
The British government has said that it can reach a trade deal with the EU in September, but is this wishful thinking? The UK and EU teams meet in Brussels on Wednesday for a seventh-round of negotiations. There are significant gaps between the sides over fishing rights, competition rules and the mechanism for enforcing a trade deal. The UK has ruled out extending Brexit talks beyond December, and given the lack of trust between the sides, a new trade deal is by no means a foregone conclusion.
The pair was flat in the Asian session but has headed lower in European trade
- 1.3296 is the next resistance line. Above, there is resistance at 1.3349.
- 1.3144 is providing support. The next support line is 1.3045.
- The 10-day MA has been under downward pressure all week but has some breathing room
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