The Pound remains “in the black”. Overview for 20.05.2020

GBPUSD intends to continue rising but is obviously losing momentum. 

The British Pound is feeling fine against the USD but the impulse is not as strong as before. The current quote for the instrument is 1.2262.

The statistics published in the morning showed that the CPI in April was 0.8% y/y after being 1.5% y/y in the previous month and against the expected reading of 0.9% y/y. The Core CPI showed 1.4% y/y after being 1.6% y/y the month before. 

In the meantime, the third round of negotiations on Brexit between the United Kingdom and the European Union was over on May 15th. However, the talks had no progress as the trade agreement remained a controversial point. London believes that the conditions laid down by Brussels are not balanced. The UK’s stance on this issue implies that London’s trade relations with other countries should cover the EU countries as well. This is similar to free trade the European Union has with, for example, Canada. British policymakers see many gaps and are surprised at a lot of unbalanced offers and provisions. 

Apart from the trade agreement, there are problems with tariffs. 

In other words, it was pretty clear that during the Brexit transition period talks would be rather complicated but the reality turned out to be much more problematic.