British pound pulls-back as Michel Barnier warned about Brexit

The British pound erased earlier gains as investors reacted to the latest Brexit news. In a statement, Michel Barnier, the chief EU negotiator said that the two sides were still having difficulties reaching agreement on key issues. He also phoned EU leaders warning them about the possibility of a no-deal Brexit. The key issues at stake are over fishing rights and fair trading practices. At the same time, some EU members are worried that the bloc will give too much. Meanwhile, the UK became the first country to authorise the Covid vaccine manufactured by Pfizer and BioNTech. 

The Australian dollar wavered today as traders reflected on the strong economic recovery by Australia. The country’s economy expanded by 3.3% in the third quarter, a sharp reversal from the second quarter’s decline of 7.9%. On an annualised basis, the economy contracted by 3.8%, which was better than the previous decline of 6.4%. This performance was mostly because of household consumption, which rose by more than 7%. These numbers came a day after the Reserve Bank of Australia (RBA) delivered its interest rate decision. The bank left rates unchanged and predicted that they will remain at the current level for at least three years.

Global stocks declined today as the market reflected on the stimulus wrangles in the United States. In a statement yesterday, Senators Mark Warner and Susan Collins unveiled a $900 billion bipartisan package that will support the economy. However, in a statement, Senator Mitch McConnel rejected the proposal and instead supported a $300 billion package. The bipartisan package includes funds for small business aid, supplemental unemployment benefits, vaccine distribution, and transportation. Notably, it will not include direct payments to individuals. Futures tied to the Dow Jones and S&P 500 are down by 0.35% and 0.25%, respectively.

GBP/USD 

The GBP/USD pair is trading at 1.3350, which is slightly below the intraday high of 1.3445. On the four-hour chart, the price is at the same level as the ascending trendline shown in yellow. The price has also moved below the 25-day exponential moving average while the Relative Strength Index (RSI) is at the neutral level of 47. Therefore, the pair will likely continue rising so long as the price is above the rising trendline. 

EUR/USD

The EUR/USD pared back some of the earlier gains and is trading at 1.2044, which is slightly below yesterday’s high of 1.2047. On the daily chart, the price is slightly above the important support of 1.200, which was the previous YTD high. The pair is also above the dynamic support of the 25-day EMA while the RSI is about to move to the overbought level of 70. The moving average of oscillator is also above the neutral level. Therefore, there is a possibility that the upward trend will continue in the near term.

AUD/USD

The AUD/USD wavered today after the strong Australian GDP data. On the daily chart, the price is slightly below the important resistance level of 0.7411. It is also forming both a bullish flag pattern and a double top. The pair is also being supported by the 25-day and 15-day exponential moving averages. Therefore, the pair will likely break-out higher mostly because of the overall dollar weakness.