The pound fell sharply against the dollar on Thursday, after EU leaders did not commit to work “intensively” with the UK to reach a trade deal and placed the onus on Britain to “make the necessary moves” to secure an agreement.
Following the conclusion of the first day of the European summit, Michel Barnier, the EU’s chief negotiator said the level playing field commitments, fisheries and issues of governance remained key sticking points holding up progress on trade talks.
EU leaders also called on the UK to make further concessions to reach a deal on trade, drawing criticism from UK Brexit negotiator David Frost.
“Surprised EU is no longer committed to working ‘intensively’ to reach a future partnership,” Frost said in a Tweet. “Also surprised by suggestion that to get an agreement all future moves must come from U.K. It’s an unusual approach to conducting a negotiation.”
Prime Minister Boris Johnson is expected to announced his decision on Friday, whether the UK will walk away or continue talks.
The lack of progress on talks come as the U.K. faces an aggressive second wave of the coronavirus that has forced the government to impose lockdown restrictions that could slow the recovery.
“With less generous financial support on offer from the government for businesses most affected by the restrictions, however, the moves might accelerate the labour market shakeout already underway, and accentuate a leveling off of the UK economic recovery that has been evident in many recent data series, including transport use,” Daiwa Capital Markets said.
In the daily charts of GBP/USD, the pair inched lower on Friday morning in Asia session.
The GBP/USD pair edged down 0.19% to 1.2889. Roadblocks between the European Union (EU) and the U.K. as they negotiate their Brexit divorce deal saw heavy selling in the pound overnight. U.K. Prime Minister Boris Johnson is due to respond to the EU’s demand for the U.K. to make compromises or prepare for trade disruptions in less than 80 days, later in the day.
As the end of the trading week nears, we can see that the pair is reaching for the support at 1.2688. Further confirmation for the pair breaking past the support level will strengthen the position of Sterling bears against the dollar in the coming week.
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