Pound slips as Brexit deal “deadline” continues to shift ahead of transition period endpetar skakalov
GBP/USD eases to a session low of 1.3240 after a tiny whipsaw from highs close to the 1.3300 level
The 60 pips drop isn’t really much of a game-changer from a technical perspective but it does help out sellers a little with EUR/GBP also managing to stave off a push below its September lows @ 0.8866-74 for the time being at least.
The news that led to the drop was that Brexit negotiators will fail to agree anything in talks this week, thus missing the mid-November “deadline” to finalise a deal.
That said, the source from the report says that a new “real deadline” is now established as being at the end of next week. Again, there is a sense of urgency to get things done within the next week so that any deal can be ratified before being implemented.
As much as the pound may be jittery over how talks are going ahead of the end of the transition period i.e. 31 December, I reckon if there is any semblance of a deal or compromise before the actual “deadline” itself, we could see that being extended again.
I mean, we’ve been heading down the same path from a 30 June “deadline” to a mid-October “deadline” and then a mid-November “deadline” and now this.
As such, I would argue that the timeline shift from mid-November to late November doesn’t change things all too much. But it at least tells us that negotiations in London this week are still going nowhere for the most part.
So, unless the market wants to focus on that – which it has been largely ignoring – then this shouldn’t be a major turning point for the pound just yet.
However, it does draw the focus and risks back to the currency and that may temper with gains or lead to some profit-taking activity in the meantime.
Source: Technical analysis