A case of nerves sent the pound sterling lower against the greenback, with the GBP/USD moving close to a 2 ½ week trough. Forex traders are worried that the EU and Britain will fail to agree to a Brexit deal, despite ongoing discussions. Such sentiment is in sharp contrast to the optimism felt just this past Friday. Michel Barnier, Chief Negotiator for the EU, was said to be rather downbeat regarding the likelihood of a deal. The situation will be addressed by the respective leaders later today, though there are concerns now that the British Prime Minister will allow the transition period to lapse without a deal if the EU does not compromise on demands.
In London as of 11:26 am, the GBP/USD was trading at $1.3261, down 1.3165% and sliding away from the session peak of $1.34492. The EUR/GBP was higher at 0.9133 pence, a gain of 1.2595%; the pair has ranged from a trough of 0.90103 pence to a peak of 0.91382 pence. The GBP/JPY was lower at 138.2000 yen, a loss of 1.2595%.
EU Data in Focus
While markets may be bracing for a no-deal Brexit, analysts say that the recent rhetoric is an indication that they are close to a deal, and are hopeful that a favorable outcome will eventually occur once the theatrics have ended. With a quiet day ahead in terms of data, markets will look to tomorrow's release of productivity reports from the EU. The recent poll suggests that economists don't see much change to the EU's 3rd quarter GDP, seasonally adjusted, with the readings likely to be 12.6% on a quarterly basis and -4.4% annualized. Germany's ZEW surveys are also due out tomorrow with analysts expecting to see another decline in the December readings, this time to -66 for the current economic situation and 46 for economic sentiment.