The pound is expected to end its three-day losing streak, and tensions between Britain and Europe have eased

On Friday (November 12), the British pound against the U.S. dollar set a new intraday high in early European trading. It is reported that the tension between Britain and Europe has eased, but there is no follow-up follow-up, and the current gains have fallen slightly.


GBP/USD found some support near 1.3350 and rebounded slightly from the lowest level since December 2020 hit earlier on Friday, ending three consecutive days of decline. After the U.S. dollar hit a 16-month high, some profit-taking has been seen as a key factor supporting the pound against the U.S. dollar. Nonetheless, any meaningful recovery still seems elusive, and the rebound trend that is attempted carries the risk of failing soon.

The higher-than-expected US consumer inflation data released on Wednesday reiterated market expectations that the Fed will be forced to raise interest rates as soon as possible. In fact, federal funds futures show that the Fed’s interest rate hike may come as early as July 2022. This, coupled with the rise in U.S. Treasury yields, should help limit any meaningful corrections in the dollar and prevent bulls from betting heavily on the pound against the U.S. dollar amid the Brexit dilemma. In addition, the modest decision made by the Bank of England last week may further contain any meaningful rise in the pound.

On the other hand, the EU is preparing to take a package of retaliatory measures if the United Kingdom triggers Article 16. The two sides will hold new negotiations on Friday to avoid an imminent trade war.

However, the British "Times" reported the positive comments made by Brexit officials on various occasions, which gave the pound a respite.

"The Brexit Secretary Lord Frost will send a signal to the EU’s chief negotiator Maros Sevkovic that the British government will continue to work hard to reach an agreement on the controversial Northern Ireland agreement, and in the next Intensive negotiations within a few weeks."

"Sources said that Frost would like to emphasize to Sevkovic that although the United Kingdom has reservations about the Commission’s proposal to reduce the transit inspection of goods between the United Kingdom and Northern Ireland, it can be adjusted if it is adjusted. Take this as the basis of the agreement."

Therefore, before confirming that the downtrend has ended, it is prudent to wait for strong follow-up buying. Market participants are now looking forward to the scheduled speech of Jonathan Haskell, member of the Bank of England’s Monetary Policy Committee, hoping to get some boost from it. In the North American market late in the morning, the initial value of the University of Michigan Consumer Confidence Index may affect the dollar price dynamics and create some trading opportunities in the pound against the dollar.

The upper resistance pays attention to 1.3412, 1.3458, 1.3602, and the lower support pays attention to 1.3353, 1.3312, 1.3267.

(The British pound against the U.S. dollar daily chart)

At 19:55 GMT+8, the pound was quoted at 1.3396 against the US dollar.