British Pound (GBP) Latest: GBP/USD at Risk with Volatility on the Rise

GBP/USD Analysis and Talking Points

• GBP/USD Gains to be Capped
• UK/EU Trade Talks to Elevate GBP Volatility
• GBP/USD Bulls May be Caught Offside

GBP/USD GAINS TO BE CAPPED

Today, the UK is due to release its mandate for the upcoming trade talks with the EU. However, as to be expected differences will be noted with the UK likely to refuse close alignment, which is likely to set up a clash with the EU. As such, upside in the Pound are likely to be capped and with speculative data (COT report) highlighting that traders are net long, risks are asymmetrically tilted to the downside.

UK/EU TRADE TALKS TO ELEVATE GBP VOLATILITY

UK STANCE	EU STANCE
No aligment over regulation	Level playing field
No extension of transition period	Willing to have extension depending on the UK's fullfilment of other obligations
Control over fisheries	Current equal access to fishing waters should be maintained
Control over immigration	No free movement of goods and services without the free movement of people

GBP/USD BULLS MAY BE CAUGHT OFFSIDE

GBP/USD TECHNICAL ANALYSIS

Once again, GBP/USD continues to hold the 1.29 handle, however, with a lack of buying interest above 1.3000, the pair has maintained its narrow range. Selling likely to extend on a break below support at 1.2882 (38.2% Fibonacci retracement.

GBP/USD PRICE CHART: DAILY TIME FRAME

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