GBP/USD finding a firmer footing above 1.3300 as UK seems to back down on IMB

• GBP/USD continues to trade with steep losses on the day but has recently been gaining some ground above 1.3300 and even reached 1.3350.
• The UK might offer to pull controversial legislation if progress can be made on Brexit talks, which might help a deal across the line.
• But the tone of Brexit developments on Monday remains unequivocally downbeat.

GBP/USD has been gaining ground above 1.3300 in recent trade, recovering back to 1.3350 amid headlines suggesting that the UK could offer to pull the controversial internal markets and taxations bills, both of which violate the EU Withdrawal treaty signed with the EU last December, if a deal can be reached. From the EU’s perspective, the existence of both of these pieces of legislation has tainted negotiations, hence an offer to pull them might help facilitate reaching a deal. As things stand, however, GBP/USD still trades with losses on the day of around 90 pips or just over 0.6%.

Pulling of IMB and taxation bill little consolation for GBP if a trade deal cannot be reached

Though it is good news for negotiations that the UK is leaning towards pulling this controversial legislation, GBP traders have not taken this as a major breakthrough.

Indeed, to the great disappointment of those hoping a deal could be clinched over the weekend, the EU and UK are still divided big three issues (fisheries, level playing field and state aid) and officials on both sides of the English Channel are sounding more downbeat on the chances that a deal can be reached. Some reports even went as far as suggesting that the UK could pull out of talks on Monday if there is no further progress.

Thus, traders remain eagerly/nervously on standby to hear of the outcome of a call between UK PM Boris Johnson and EU Commission President von der Leyen which started at 16:00GMT and is likely ongoing.