fundamental News - GBP/USD

Pound Sterling recover this Thursday after it went lower against its main rivals on Wednesday afternoon in UK session following confirmation that EU and UK negotiators are unlikely to strike a post-Brexit trade deal this week.

Following days of intensive talks EU Chief Negotiator Michel Barnier has told EU ambassadors in Brussels that "a deal hangs in the balance differences still persist on the three main issues".

The pound is the worst performing major currency of the day on the back of the developments, although the fact that negotiations are continuing should limit the downside.

France's President Emmanuel Macron has also said on Wednesday he's keeping a close eye on Brexit trade negotiations and won’t sign up to anything that goes against France’s long-term interests.

The Times reports France is advocating a view that the EU accepts a 'no deal' outcome to negotiations if the UK does not conceed further ground, believing the country will be more willing to make concessions in 2021 once the realities of 'no deal' become evident.

However, political commentator and journalist Andrew Neil explains the risks of France's stance succinctly in the following observation:

"Could be just last-minute tactic. But if it's more than that, it is a significant miscalculation by EU. UK will not return cap in hand. More likely to conclude that if a liberal country, free market, free trade economy, backing net zero, with close military/security ties to Europe can only get a 'punishment beating' deal with EU then the UK will proceed with no deal and make the best of it, whatever the short-term pain. Instead of being chastened, UK likely to be defiant. And EU/UK relations would be in the freezer for years. Not good."

Markets agree with the view the situation is "not good".