Sterling eased in early trading ahead of the most important week of Boris Johnson leadership. Over the weekend, negotiators from both sides tried to come up with compromises that will be acceptable by members of the European Parliament and the House of Commons. These talks started on a high note as Donald Tusk said that he had seen some progress. On Sunday, diplomats told the media that there had been no breakthrough because of the gap between the two sides. Just last week, Leo Varadkar, the Prime Minister of Ireland said that he was optimistic that a deal will be made before the October 31 deadline. If a deal is made, the UK will enter a 14-month period where relations with the EU are maintained as a new trade deal is negotiated. On the other hand, if there is no deal by October 19, Boris Johnson will be forced to seek for an extension.
GBP/USD. After the impressive run last week, the GBP/USD pair eased slightly today. The pair declined from Friday’s close of 1.2705 to a low of 1.2585. On the hourly chart, the price is above the Ichimoku Cloud and between the Tenkan Sen and the Kijun Sen lines. The Chaikin Oscillator has moved below zero while the momentum indicator has fallen. The pair will likely see some volatility as traders receive more news from Brussels.