The GBPUSD pair stalled today as the European Union and the UK restart the stalled Brexit talks. Members from both sides will have a virtual meeting to deliberate on the future relationship. This will be the first meeting after the inaugural meeting in March. This week’s meeting will focus on trade in goods, services, and competition.
The meeting happens at a time when time is running out. On the one hand, EU members have said that the timeline the UK has set aside for a deal is illogical.
On the other hand, the Boris Johnson administration has said that it won’t seek for an extension. As such, the country will separate from the EU completely on December 31st this year without a deal. According to Bloomberg, the two sides have until the end of June to request an extension of the deal.
There are several challenges for a deal. First, a lot of time has been lost because of the coronavirus pandemic. Second, this will be the first such deal negotiated through video. Third, there are key fundamental differences in both sides. The most pressing challenge is that the UK has ruled out operating through the rules of the European Union. Instead, the country has said that it will set its own rules.
There have also been key differences on fishing, criminal justice, law enforcement, and competition policy.
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GBPUSD Technical Outlook
On the four-hour chart, the GBPUSD pair has consolidated around the 50-day exponential moving averages. The price is also along the 61.8% Fibonacci Retracement level, which was drawn by connecting the highest and lowest levels in March.
The pair has also formed a small three white soldiers pattern, which is a sign that the pair will continue declining. Therefore, I expect the pair to move lower and retest the 50% retracement level initially. The pair will maintain the downward momentum if it moves below this Fibonacci.
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