GBP/USD performance ahead of EU/UK trade negotiations

[Philip]

The EU/UK trade talks are ongoing but they cant seem to agree on some contentious issues. What will be the effect of these talks on the GBP/USD performance?

[Sophia]

Hi Philip,

The day to day GBP/USD chart reveals this pair has been trading within a short-range this week. It shows the 50-day moving average resisting any urges to move higher. 
In the background, the United Kingdom and European Union trade negotiations go for a final round of talks in the coming week.
In the coming round of talks, little progress is expected to come from either side. There are three main intractable issues holding up their progress.
First, the two cannot seem to agree on what future role the European Court of Justice will hold. Another contentious issue is what each side considers to be a level playing field. Finally, the two sides cannot agree on fisheries.
Each side takes a fixed position that the other should tone down on their stance. With this game of you first in play, a situation may arise where the European Union will bid the United Kingdom goodbye without a functioning trade agreement. None of the parties wishes for this to happen.
UK Prime Minister Boris Johnson will apparently attend the talks next week. His attendance is expected to help achieve a breakthrough. Nevertheless, both sides appear to have already dug their heels in, and as such, progress expectations are low.
The UK/EU trade stalemate creating a backdrop, Sterling Pound, will have a hard time pushing higher. This means short-term gains will remain mostly on hold.
Led in part by middle month re-balancing, a short-term sequence of higher lows keeps in place. This will likely favor the Pound Sterling against the US dollar. On the other hand, with a 50% FIB retracement reading 1.2306 also coming into play, a further downside looks most likely in the coming week.
To turn the sentiments positive, however, a close and break above 1.2362 needs to happen.