EU-UK Trade Talks and British Pound (GBP) Price, Chart and Analysis:
- US Labor Report will dominate trading action going into the close of the week.
- Reports that the UK will slash a wide range of tariffs on imports.
GBP/USD – Touching a Fresh Low for the Year
GBP/USD is under further pressure Friday and trades just off its low for the year. While Sterling as a currency is weak, the US dollar is very strong this week, adding fuel to the move lower. Later in the session the latest US Non-Farm Labor Report – 13:30 GMT – will drive the next move in the greenback and it will garner extra interest today after Wednesday’s bumper ADP jobs numbers. The private sector report showed 291k new jobs created, compared to expectations of 160k, the highest print in nearly five years.
The US dollar basket (DXY) traded at levels last seen in mid-October Thursday and it may be that markets have already priced-in a better-than-expected NFP release today.
US Dollar Basket (DXY) Daily Price Chart (August – February 7, 2020)
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Post-Brexit Tariffs May Be Cut
A story in The Daily Telegraph today explains how the Government may well slash a wide range of tariffs as the country looks to set its own trade policy for nearly 5 decades. Scrapping of so-called ‘nuisance tariffs’ such as those under 2.5% would help households save around £300 a year. The plan, outlined by International Trade Secretary Liz Truss, is part of a plan by the UK to free itself from EU rules. Ms Truss said, “The UK has left the EU and it is time for us to look forward to our future as an independent, global champion of free trade. It is vitally important that we now move away from the complex tariff schedule imposed on us by the European Union”.
GBPUSD now trades in a support zone between 1.2905 and 1.2954 with the lower bound under pressure. A break below would put cable back at pre-general election levels and heading towards secondary support around 1.2815. The chart shows the pair trading below the 20- and 5-day moving averages, but above the 200-dma, while the CCI indicator suggests the pair are currently oversold.
GBP/USD Daily Price Chart (August 2019 – February 7, 2020)
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