The GBP/USD continues to tilt lower today, even as the UK and European Union make progress on brexite.
Both sides have made some concessions on key issues, according to Ursula von der Leyen.
The open questions concern fisheries and the policy of fair competition.
The GBP/USD has fallen for the third day in a row, although traders remain optimistic about a brexite deal. It is trading at 1.2935, which is lower than the monthly high of 1.3176.
GBP/USD falls even as the brexite business approaches
Brexite agreement nearing
According to Bloomberg sources and the President of the European Commission, Ursula von der Leyen, a brexite deal is close to completion.
According to Bloomberg, negotiators have made significant progress in recent weeks and are close to resolving important issues. According to the report, an agreement could be reached at the beginning of November, which is plenty of time before December 31.
In fact, the agreement is so close that the UK and the European Union have begun drafting the text on key issues, including a level playing field and state aid. They have also made great progress on how to enforce the agreement. Other areas in which they have made progress include welfare rights, customs and air transport.
Ursula von der Leyen repeated the same opinion in a statement yesterday. She said that the two sides had made decisive progress, but named a level playing field and fisheries as the only outstanding issues.
As far as a level playing field is concerned, the EU wants a commitment that the UK will not implement any rules that unfairly harm its business. This includes the level of state aid that the UK can give to its businesses. The UK has said that as an independent country it must have authority to set its own rules.
Fishing rights are about access to the rich British waters where most EU fishermen catch their fish. The EU has demanded unlimited access to these waters. It said:
“We are in very close contact every hour, because the negotiations have now been intensified … There are 11 more fields of dossiers that need to be negotiated”.
On the subject of fisheries, France’s Minister for European Affairs said: “There are eleven more dossiers that need to be negotiated:
“The face of brexite will be the face of our fishermen, so we must be able to tell them that their interests have been protected.
The GBP/USD pair may fall due to the rising Covid 19 cases in the UK and the potential risks to the economy. In a report yesterday, the Financial Times reported that more than 500,000 companies are in considerable distress. This means that these companies have a debt case in a local court worth ~5,000 pounds.
Technical analysis GBP/USD
On the four-hour chart, we can see that the GBP/USD has been bearish since October 21, when it reached a high of 1.3176. During this decline, the price managed to move below the ascending blue channel. It has also moved away from the 50% and 38.2% Fibonacci retracement levels. The price is also below the 25-day and 15-day exponential moving averages. Therefore, I suspect the pair will continue to fall, with the next target at the 23.6% retracement level at 1.2862.