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GBP/USD Clings Onto Gains as Experts Question Brexit Deal Optimism

Wednesday,   30-Sep-2020   08:53 AM (IST)

The pound hung onto gains against the dollar on continued hopes over a Brexit deal despite some experts suggesting the optimism could be misplaced amid fresh U.K.-EU trade talks that got underway Tuesday. GBP/USD rose 0.25% to $1.2877, after rising above $1.29 intraday. The U.K.-EU talks come in the midst of souring U.K.-EU relations after British Prime Minister Boris Johnson proceeded with an internal market bill that undermines the Brexit withdrawal agreement. In an attempt to extend an olive branch, the U.K. has submitted new draft negotiating papers to find a way past the key sticking issues including fisheries, the "level playing field," and social security coordination, according to media reports. Brexit talks aside, the Commerzbank also warned that upside for the sterling would likely be limited by the second wave of the virus that has forced the U.K. government to renew restrictions that could be be "stepped up" to curb the outbreak. Further restrictions would hurt the economic recovery and likely prompt the Bank of England to take a deeper look at negative rates despite Bank of England member David Ramsden pushing back on the idea on Monday.