GBP/USD slips below $1.34 as EU rejects UK’s fishing compromise

The pound found itself on the back foot once more on Tuesday, amid concerns over the state of Brexit talks.
 
However, Sterling is showing signs of recovery so far this morning, with GBP/EUR ticking up to €1.1023 and GBP/USD climbing to $1.3438. GBP/CAD has firmed at C$1.7309, while GBP/AUD and GBP/NZD hold steady at AU$1.7747 and NZ$1.8978, respectively.
 
Looking ahead, with Brexit still in the limelight we can likely expect to see more volatility infused in GBP exchange rates today.
 

What’s been happening?

After a short-lived rally at the start of the European trading session, the pound found itself trending lower again yesterday.
 
The slump in Sterling came in the wake of reports that EU member states had rejected Boris Johnson’s proposed concessions on fishing rights, amid strong opposition from France and Denmark.
 
However, this downturn in GBP was tempered somewhat by the publication of the UK’s latest GDP figures, after growth was revised slightly higher the third quarter’s final release.
 
The euro, meanwhile, struggled to find support on Tuesday, following the confirmation that the mutated coronavirus strain from the UK had been detected in the EU.
 
At the same time, the US dollar rallied through yesterday’s session, being propelled higher by safe-haven demand and a stronger-than-expected US GDP print.
 

What’s coming up?

Turning to today’s session it’s likely we will see Brexit continue to act as a key catalyst for the Pound.
 
As such, we could see GBP exchange rates continue to trend lower if talks between the UK and EU remain at an impasse.
 
On the other hand, the pound looks well positioned to surge should a last-minute deal be found.
 
Coming up later this afternoon, the publication of the latest US durable goods orders could dampen the appeal of the US dollar if order growth slowed as expected last month.
 
Also in the spotlight for USD investors will be last week’s jobless figures, where another increase in jobless claims could put even more pressure on the ‘Greenback’.
 
Meanwhile, in the absence of any notable EUR data, movement in the euro is likely to be driven by coronavirus concerns, with the single currency likely to face some headwinds if any major outbreaks of the new Covid-19 strain are detected anywhere on the continent.