Forex Market: GBP/USD eases from three-week highs amid renewed Brexit talks, UK’s Sunak budget speech awaited

GBP/USD eased from yesterday’s three-week highs, but remained supported above the 1.2500 mark on Wednesday, as EU and British negotiators resumed Brexit talks and ahead of a new budget speech by UK’s Chancellor of the Exchequer Rishi Sunak, scheduled at 11:30 GMT.

Sunak is expected to announce a GBP 2 billion fund aimed to ensure six-month work placement jobs for unemployed persons aged between 16 and 24 and to allocate GBP 3 billion for improving home energy efficiency, which would support at least 100,000 jobs. The Finance Minister is also expected to announce a cut in UK property purchase taxes in support of local housing market.

The Sterling received a boost yesterday on some optimism that EU and British trade negotiators might find common ground during informal talks at a dinner that took place at 10 Downing Street on Tuesday evening.

Meanwhile, in a telephone conversation on Tuesday British PM Boris Johnson told German Chancellor Angela Merkel that his country was ready to part ways with the EU on the same terms that Australia has with the bloc, in case a future trade deal is not agreed on.

As of 11:17 GMT on Wednesday GBP/USD was inching down 0.06% to trade at 1.2537, while moving within a daily range of 1.2509-1.2568. Yesterday the major pair climbed as high as 1.2592, its strongest level since June 16th (1.2688).

No relevant macroeconomic reports are scheduled to be released on Wednesday.

Bond Yield Spread

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, equaled 24.7 basis points (0.247%) as of 10:15 GMT on Wednesday, down from 25.8 basis points on July 7th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 1.2533
R1 – 1.2603
R2 – 1.2662
R3 – 1.2733
R4 – 1.2803

S1 – 1.2474
S2 – 1.2404
S3 – 1.2344
S4 – 1.2285

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