Trading Sideways Ahead of Key Brexit Talks

GBP price, Brexit news and analysis:

• As stocks tumbled Monday on fears of a coronavirus pandemic, GBP/USD held its ground.
• While that is a positive sign for the pair, it will likely be offset by the start of UK-EU Brexit talks next week that are expected to be difficult.

Brexit back in focus for GBP/USD

The UK and the EU are continuing to take hardline positions ahead of talks that begin next week on the future relationship between the UK and the bloc. This is potentially negative for GBP/USD but so far the pair has held its ground despite the continuing concern about the spread of the coronavirus that hit risk assets such as stocks hard Monday.

Negotiations are due to begin next Monday, with both sides continuing to play hardball ahead of the meeting. EU ministers are due to meet later today to approve the EU mandate for the talks and UK ministers will meet to discuss the government’s opening stance, with the resulting document due to be published Thursday.

In a sign of how difficult the negotiations will be, France has already warned UK Prime Minister Boris Johnson that it will not be blackmailed into accepting a bad post-Brexit trade deal because of his refusal to extend the transition period beyond the end of 2020.

Nonetheless, GBP/USD continues to trade sideways, albeit within a broader downward trend.

GBP/USD Price Chart, Daily Timeframe (December 5, 2019 – February 25, 2020)

Chart by IG (You can click on it for a larger image)

Sterling’s stability despite the fears of a coronavirus pandemic is clearly positive for the Pound. It should also benefit from a more positive tone in the markets Tuesday as news of vaccine trials and hopes of monetary and fiscal stimulus calm the fears that led to a huge move from risky assets into safe havens Monday.

The overall position therefore remains neutral ahead of a quiet week for UK economic data.

We look at Sterling regularly in the DailyFX Trading Global Markets Decoded podcasts that you can find here on Apple or wherever you go for your podcasts

— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below

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