Sterling (GBP) Price, Chart and Analysis
- UK Retail Sales may give the BoE something to think about.
- EU wants the UK to accept a level playing field post-Brexit.
British Pound (GBP) Nudges Higher as Support Levels Strengthen
Talk from BoE MPC members over the last two weeks that a UK interest rate cut may be needed if data prints remain weak will be challenged shortly when the closely-watched UK retail sales for December is released. Last month’s data proved disappointing and market expectations for today’s release are for a robust turnaround. If retail sales data match or beat expectations, talk of a UK rate cut at the end of January will be pared back sharply and Sterling will continue to push ahead.
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EU to Demand the UK Remain Aligned in Post-Brexit Trade
The post-Brexit EU-UK trade negotiations have not started in earnest and already roadblocks are being put in the way of a seamless transition. The European Union is said to be demanding that the UK remains in alignment with EU regulations as part of the new trade agreement, something that PM Boris Johnson has stated will not happen. The EU is also demanding full access to UK fishing, with one report saying that if these rights were not granted, talks may break down completely. What some may see as sabre-rattling, others will see as a serious attempt by the EU to impose its will on the UK.
GBP/USD continues to drift back up to the 1.3100 level and the pair are currently in positive territory for the week after Monday’s 80 pip sell-off. GBP/USD is also trying to make a convincing break above the 20- and 50- day moving averages. The pair are also threatening to take out the downtrend line off the December 12 high at just over 1.3500. A break and close above both the moving averages and trendline resistance opens the way back to 1.3177 ahead of the January 2 high at 1.3285.
GBP/USD Daily Price Chart (May 2019 – January 17, 2020)
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