Having touched a six-week high on Tuesday, GBP/USD distanced from that area on Wednesday, sliding below the 1.2700 mark, as reports in the media emerged hinting at a possible no-deal Brexit scenario.
British Transport Secretary Grant Shapps said earlier Wednesday that the government wanted a free trade deal with the European Union, but still, the country was prepared to leave the bloc with no deal.
His comments followed a Tuesday report by The Telegraph, which stated the EU and the UK might not manage to sign a post-Brexit trade deal, as British PM Johnson now has only a week of time before his July deadline. The media reported the UK government’s working assumption was the country would trade with the EU abiding by World Trade Organisation terms.
A separate report by the Financial Times stated the UK had also abandoned hopes to sign a free trade deal with the United States prior to the presidential election, with progress being hindered by accelerating coronavirus pandemic.
As of 11:24 GMT on Wednesday GBP/USD was edging down 0.36% to trade at 1.2686, while moving within a daily range of 1.2644-1.2741. Yesterday it climbed as high as 1.2768, its strongest level since June 10th (1.2813). The major pair has risen 0.90% so far this week, following a 0.43% drop in the preceding week.
On today’s economic calendar, at 14:00 GMT the National Association of Realtors will report on US existing home sales. The respective index probably rebounded 24.7% to a seasonally adjusted annual level of 4.80 million units in June compared to May, according to market consensus. In May, sales of previously owned houses were 9.7% lower from a month ago to 3.91 million units, also the lowest level since October 2010.
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 24.9 basis points (0.249%) as of 10:15 GMT on Wednesday, down from 26.1 basis points on July 21st.
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 1.2717
R1 – 1.2783
R2 – 1.2835
R3 – 1.2901
R4 – 1.2968
S1 – 1.2665
S2 – 1.2599
S3 – 1.2547
S4 – 1.2496