The EU summit at the weekend, which was also devoted to the trade agreement with the United Kingdom, has failed to deliver. Shortly afterwards, there were some negative statements about the low prospect of reaching an agreement.
It was reflected by the weakening of the pound on the charts, although it is worth noting how quickly the pound has returned to growth. This clearly demonstrates the high confidence of the financial markets in the fact that Prime Minister Johnson will not risk being held responsible for any consequences of a lack of trade agreement.
The markets have also managed to get used to its rhetoric, and now all the reports have little effect on the charts. Here the advantage is on the demand side, because good information results in a stronger pound. There is less and less time until the end of the year, so we are getting closer and closer to a trade agreement, as the markets believe. Yesterday, in an interview, the British Prime Minister said that he still hopes for a compromise and there is an opportunity for that.
A space for declines
It is also known that the image of a tough negotiator fighting for the interests of his country is part of the political game. The EUR/GBP weekly chart shows a lot of space from resistance limiting the side trend to make a bigger downward movement. The first target is at 0.8860. The impetus to initiate the declines will be the information about signing the deal – trade agreement.
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