Pound Traders Wary of EU Summit News

Currency strategists say, even if a deal is made, the gains for the Pound Sterling are likely to be limited in the coming weeks. 

The Pound Sterling recovered after earlier feeling some broad pressure during the London trade on Wednesday as FX traders gauge the likelihood that a deal will have been made for the Brexit before the Thursday deadline. Both the Prime Minister and his EU counterpart in the discussions will discuss where they are in the process later today. The chief negotiators on both sides insist that key gaps where there has yet to be compromised are still hindering the process. One draft Brexit decision seen by some media outlets and expected to be announced at the looming EU summit is that the talks will be deemed insufficient by EU leadership and that a new trade deal is not close to being sealed. EU leadership has said that they are prepared for that eventuality; whether the British government also remains to be seen. Currency strategists say, even if a deal is made, the gains for the Pound Sterling are likely to be limited in the coming weeks. 

In London as of 11:01 am, the EUR/GBP was trading at 0.9066 Pence, down 0.1124%, and off the session trough of 0.90429 Pence. The GBP/USD was higher at $1.2945, a gain of 0.0889%; the pair has ranged from a low of $1.28623 to a peak of $1.29839.

Dollar Finds Support as Safe Haven

In the US, only support as a safe haven currency has continued to provide a boost for the US Dollar. Market players remain wary of the outcome of the upcoming presidential election as support for Mr. Trump erodes, even from members of his own GOP, and Mr. Biden picks up more and more key endorsements, many of them crossovers from the Republican party. Moreover, a resurgence of the Coronavirus in many states, coupled with the cessation of trials for a vaccine to combat the Covid-19 virus, are also weighing on the greenback. The absence of a second stimulus package from the federal government is also a key factor. The EUR/USD was trading at $1.1731, down 0.1124%, off the session peak of $1.17542.