GBP/USD

Talks between U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen late Wednesday ended without a breakthrough as there remains differences over fisheries. They have until Sunday to reach an agreement, otherwise there is potentially around $1 trillion in annual trade that is at risk of tariffs and quotas being imposed especially if a deal cannot be reached before transition arrangements end on December 31. At 08:00am the U.K. GDP and Manufacturing Production figures were announced, with GBP (MoM) at 0.4% versus the previous figure of 1.1%, Monthly GDP 3M/3M Change at 10.2% versus 15.5% and Manufacturing Production (MoM) at 1.7% versus 0.2%. By contracts, U.S. lawmakers were able to approve a stopgap government funding bill on Wednesday, but negotiations over a broader Covid-19 relief package is yet to be agreed as differences exist over aid to state and local governments. While the European Central Bank is scheduled to hold its latest policy-setting meeting later today, and the central bank is widely expected to increase and extend its pandemic bond-buying program. From the technical perspective the Pound which had shown bullish bias of recent from a low of 1.26749 on 23/09/2020 to a high of 1.35393 on 04.12.2020, seems to be stalling due to the uncertainties surrounding Brexit as the deadline approaches. With the inverted hammer and price rejection on the 04/12/2020 as well as yesterday’s higher price rejection, I anticipate that there is the potential for short term weakness on the Pound particularly if an agreement is not reached by Sunday. The Pound could move significantly lower towards 1.2986 and even 1.2675.