Forex Market: GBP/USD set for weekly loss, markets await UK’s approach to Brexit negotiations

GBP/USD was attempting a rebound on Friday following Thursday’s retreat, as market players were expecting British Prime Minister Boris Johnson’s approach to Brexit negotiations later in the day.

Previously, Johnson had set October 15th as a deadline after which Britain would leave the negotiations table in case a deal had not been secured.

“There are so many conflicting signals coming from Brussels it is hard to conclude what the ‘mood music’ is. But it’s probably true to say the ‘mood music’ soured a little yesterday,” Derek Halpenny, head of research at MUFG, wrote in an investor note.

“We see GBP price action as consistent with a reasonable degree of hope on a deal being done.”

Britain’s Foreign Secretary Dominic Raab said the EU officials were demanding that the country make all of the compromises, while adding that both sides were getting close to an agreement.

Yet, according to Germany’s Minister of State for Europe Michael Roth, there has been no progress on the major topics, which include fair competition, fisheries and dispute resolution.

Meanwhile, a new level of coronavirus-related lockdown measures will be imposed in London from midnight on Friday, which will prevent different households to mix indoors.

As of 9:40 GMT on Friday GBP/USD was edging up 0.27% to trade at 1.2937, while moving within a daily range of 1.2883-1.2949. However, the major pair looked set for its first loss in three weeks, being down 0.79%. GBP/USD has risen 0.21% so far in October, following a 3.42% slump in September, its worst performance since July 2019.

In terms of macro data, today’s focus will be on US retail sales report for September due out at 12:30 GMT.

Additionally, markets will be expecting US industrial and manufacturing production numbers for September, scheduled to be released at 13:15 GMT.

And at 14:00 GMT Thomson Reuters/University of Michigan will release the preliminary results from their monthly survey on consumer sentiment for October.

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 20.4 basis points (0.204%) as of 8:15 GMT on Friday, up from 20.3 basis points on October 15th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 1.2941
R1 – 1.2991
R2 – 1.3081
R3 – 1.3131
R4 – 1.3182

S1 – 1.2852
S2 – 1.2801
S3 – 1.2712
S4 – 1.2623

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