Pound refuses to cede against the US dollar amidst rising no-deal Brexit risks

Despite the rising conflicts of U.K and EU and the deadlock of post-Brexit talks which will be resumed next week, the British Pound continues to surge with its 5-month highs against the U.S. dollar and is likely to add gains as GBP/USD rose 0.15% to $1.305sh.  

Next week August, 18, 2020, U.K. ’s chief Brexit Negotiator David Frost would expand more on a range of measures including regulator standards, fisheries, and security policy. However, the standoff seems difficult to resolve as the U.K. would not come in to terms on its sovereignty, over its laws, courts or fishing waters. 

Analysts however seems to deemphasize any deal making at the upcoming round of talks next week as U.K. seems to adopt World Trade Organization terms with the EU. 

“As the trade talks have made no progress so far, it seems increasingly unlikely that an agreement will be reached by the end of the year,” Commerzbank (DE:CBKG) said. “Without such an agreement, trade would then be conducted according to WTO rules from next year onwards, which would be a bitter blow for both sides in real economic terms, but above all for the British economy, for which the EU is by far the largest trading partner.” 

Despite all this, the probability of a no-deal Brexit seems to have not burdened the pound as the U.S dollar continues it slide in the face of internal issues of U.S.A.’s ceased unemployment benefit issues and other economical strains. 

GBP/USD would likely reach to $1.32 nearing the end of year 2020 and might hit a high of $1.39 next year as conjectured by Commerzbank. 

TECHNICAL OUTLOOK 

As we see in the daily charts of GBP/USD, the currency pair is nearing its resistance at 1.318sh once again. The prices for this week also seem to glide in the 78.60% retracement signaling a probable bullish surge at the start of next week. As forecasted by Commerzbank of the pair to reach 1.32 by the end of the year, will it finally break out next week at the 1.318sh resistance and reach its new highs? 

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