GBP/USD holds at $1.30 as markets await update on Brexit trade talks

The pound was subdued through the end of last week’s session, with investors shunning Sterling in the absence of any Brexit headlines.
 
Sterling continues to trade flatly at the start of this week’s session, with GBP/EUR stable at €1.0990 and GBP/USD muted at $1.3008. GBP/CAD is rangebound at C$1.7137, while GBP/AUD and GBP/NZD hold steady at AU$1.8278 and NZ$1.9470, respectively.
 
In the spotlight this week are the latest US and Eurozone GDP releases. Will a rebound in domestic growth offer support to either the US dollar or euro?
 

What’s been happening?

The pound was mostly rangebound through the end of last week’s session, with the currency left in a holding pattern as investors await an update from ongoing Brexit trade talks.
 
Capping any upside potential in Sterling was the publication of the UK’s latest PMI figures. With October’s preliminary release highlighting a slowing of economic activity, particularly in the service sector which was hit by stricter coronavirus restrictions.
 
At the same time, the US dollar found itself on the on the defensive on Friday morning, as the news that the US approved an antiviral drug for the treatment of coronavirus bolstered market risk appetite and dented the appeal of the safe-haven currency.
 
However, the ‘Greenback’ was able to bounce back later in the session after the latest US PMI figures revealed US business activity struck a 20-month high in October.
 
The euro, meanwhile, ticked higher at the end of last week’s session, with the single currency defying a contraction in the latest Eurozone PMI release thanks to a bumper manufacturing PMI from Germany.
 

What’s coming up?

Taking centre stage this week, we have the publication of the latest GDP figures from both the US and the Eurozone.
 
Thursday’s US release will likely have the greatest impact on currency markets, with investors particularly eager to see how well the world’s largest economy rebounded in the third quarter. It’s likely a notable rebound will cheer markets, and as a result potentially weaken the US dollar.
 
Meanwhile, the Eurozone release is also expected to show a recovery in the third quarter. But given the bloc is already showing signs of contracting again in the fourth quarter, will anything short of a miracle rebound in growth be able to inspire the euro?
 
For GBP investors the focus will likely remain on Brexit this week, with traders likely to pounce on any updates on talks, while any positive developments will likely carry the pound higher.