GBP at Downside Risk amid Deadlocked UK-EU Talks

WikiFX News (7 Nov.) - GBP/USD fell sharply on Wednesday after seeing a 1% surge. Despite developments in UK-EU trade talks, further obstacles and outbreaks may penalize GBP/USD.

It is reported that an agreement between the UK and EU could be struck by the mid-November, considering their chief negotiators Frost and Barnier may begin a new round of talks. The upbeat process sent a rally to the pound.

However, fisheries are the main stumbling blocs for a trade deal as the two sides are increasingly divided on setting trade standards and rules.

In addition, new restrictions across England would kick in after November 5. Senior cabinet minister Gove said a lockdown could be extended beyond early December, which triggers a certain panic in the market.

The pound failed to find support from the upbeat news of UK-EU talks, thus the market may head for the safety of the dollar. Since GBP/USD has drastically declined from the highs of the previous two weeks, there remain downside risks in the near future.

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Chart: Trend of GBP/USD