Cable down to fresh lows under 1.3050
The pound is being hit with another leg lower on the day as EU chief Brexit negotiator, Michel Barnier, and UK prime minister, Boris Johnson, outlined two very different and near opposite stances ahead of negotiations on a future trade relationship.
On alignment to the EU rules, the EC says that it will be tied to market access to ensure a level playing field. Meanwhile, the UK says there is no need for an agreement to involve accepting EU rules and that any relationship needs to be 'tit for tat'.
On the Gibraltar issue, the EC says that the trade deal will not apply to Gibraltar as they continue to back Spain on the matter. Meanwhile, the UK says that it will be negotiating on behalf of the whole UK family, "which includes Gibraltar".
On a mechanism to try and resolve disputes, the EC says that any such ruling will require the ECJ to have jurisdiction on resolving such differences in trade. Meanwhile, the UK says that it wants a smooth and unintrusive system, but "without ECJ jurisdiction".
On fisheries, the EC says that any trade deal requires fisheries to be part of the deal as well. Meanwhile, the UK says that it not necessarily has to be although they note that they are willing to consider such a deal.
Essentially, it just continues to show that both sides are shooting from two different angles as they beat their chest before entering the ring. Both of them want to show that they are "winners" in this fight and that they are strong enough to not offer concessions.
But unless there will be concessions made, it is not looking like we will see some form of comprehensive trade deal being struck between both sides in the coming months.
For the pound, this potentially spells more trouble ahead as well. But for now, cable is continuing to lose ground with sellers breaking below the key hourly moving averages and establishing a more bearish near-term bias.
If price starts to firmly chew through bids at around 1.3050, the 1.3000 level is next with further support seen around 1.2975-80.
