GBP/USD: On the back foot below 1.2900, Brexit talks in focus

• GBP/USD registers three-day losing streak.
• Tories ignore the EU’s “level playing field” by showing readiness for no-deal Brexit.
• Brexit talks will begin the next week, June deadline likely to be missed as the EU relies on Germany broker peace.

GBP/USD stays mildly negative, -0.05%, to 1.2885 while heading into the London open on Friday. The Cable managed to ignore the widespread US dollar weakness the previous day as the UK PM Boris Johnson’s team put forward agendas of their post-Brexit trade-deal negotiations with the EU. While the next week’s Brexit talks are the key to the markets, coronavirus-led risk-off has been roiling the trades off-late.

Tories maintain their ability to surprise the global markets and disrespect the European Union (EU) at the same time. The UK PM Johnson and Company showed readiness to start preparing for the no-deal Brexit if the EU-UK fail to agree on anything by June. However, a British legal expert said that the UK could accept the jurisdiction of the European Court of Justice (ECJ) despite no longer being a member of the EU.

Following the mandate, the UK Express rolled out the news that the EU is relying on the German Chancellor Angela Merkel if the sides can’t agree to a deal by June. The reason is Merkel’s scheduled time for the bloc’s rotating presidency in July. The news mentioned, “An EU ambassador said both Berlin and Paris expect trade talks to miss the summer deadline set out in Boris Johnson’s lead negotiator David Frost’s mandate.”

Elsewhere, coronavirus fears keep the global markets under pressure. Risk aversion is in full form amid expectations that the outbreak of the Chinese virus in the top-tier economies will push the US Federal Reserve and the rest towards further monetary easing.

That said, the US 10-year treasury yields drop to the record low of 1.241% by the press time whereas stocks in Asian also mark the sea of red.

Looking forward, coronavirus headlines will be the key while the second-tier data from the US can offer intermediate moves. However, major moves are less likely as traders will wait for the EU-UK trade talks starting from Monday.

Technical Analysis

The two-month-old falling trend line around 1.2840 gains the bears’ attention while 50-day SMA limits the pair’s short-term moves around 1.3025.