- GBP/USD remains vulnerable amid notable US dollar demand.
- Fresh optimism on the Brexit front fails to deter the GBP bears.
- Eyes on Brexit talks and US Consumer Sentiment data amid inflation fears.
GBP/USD is flirting with eleven-month lows near mid-1.3300s, undermined by the persistent strength in the US dollar across its main rivals. Markets refrain from placing any bets on the cable ahead of fresh Brexit talks.
Brexit talks in focus
The currency pair is challenging the bullish commitments while sitting at the lowest levels since December 2020 at 1.3354. The hot US inflation-led strength in the greenback remains unabated, with the US dollar index hitting fresh 16-month tops at 94.26, as of writing.
A solid jump in the US Consumer Price Index (CPI) ramped up the Fed’s rate hike expectations, sending the dollar higher alongside the yields.
Meanwhile, downbeat UK Q3 GDP data appears to have poured cold water on a December Bank of England (BOE) rate hike, which likely weighs negatively on the pound. At the same time, looming Brexit risks keep the GBP bulls on the edge.
Despite the latest UK Times report that PM Boris Johnson does not want to trigger Article 16, all eyes remain on the meeting between the British Brexit Minister David Frost with the European Union (EU) for further clarity on the Northern Ireland Protocol.
Frost is seen hinting at renewing efforts to get a deal on the controversial Northern Ireland protocol and enter intensive talks over the next few weeks, in an effort to de-escalate tensions with Brussels.
Looking ahead, the US Michigan Consumer Sentiment data will be closely eyed apart from the critical Brexit talks.
