The UK-EU trade talks have been the highlight of the British pound for several days in a row. However, it seems that both the UK and the EU aren’t budging. The two nations are now at a standoff with neither one of them willing to make a compromise on their policies.
The Latest News on the Trade Talks
As per the latest discussion between both parties, both the UK and the EU did not come up with any progress regarding the various aspects that they were supposed to discuss. Due to that, the GBP suffered quite a hit as well as the EUR.
This week, we can expect the UK to draft a legal text in order for the members of the EU to go over the details on how the UK wants to reset the trade talks of both nations. The short term movement of the GBP will depend on what the content of the legal letters are and what the reaction of the EU members and third parties is.
According to Andy Haldane, head economist of the Bank of England, the central bank is planning to exhaust all possible options to keep the economy of the UK afloat. These options may include negative interest rates or the purchasing of more high risk assets. Haldane also mentioned in an interview that the economy is significantly weaker than what it was last year which is why the country’s case is being dealt with much urgency.
The Current Status of the GBP
Right now, the Sterling is facing bearish pressure, especially against the USD. Should the shorts of the USD unwind in the coming week, we can expect to see a drop in the GBPUSD pair. This all really depends on the macro news from the side of UK. Pessimistic news will bring down the currency lower while more optimistic news will keep it afloat.
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