Sterling traded in tight ranges on Friday, pinned near the $1.29 mark against the dollar as a lack of news around ongoing Brexit trade deal negotiations left investors reluctant to bet big on the currency.
Britain resumed talks with the European Union over a post-Brexit trade agreement this week. Fisheries and rules governing state subsidies are the two critical issues in the negotiations, EU Commission President Ursula von der Leyen said on Thursday.
“Those were the big problems before too, so it’s no big news,” said Marshall Gittler, head of research at BDSwiss.
“European Council President Michel said they would probably assess the state of the talks next week with Brussels hoping to start the ratification process in mid-November. That should be positive for sterling, if indeed it happens.”
By 0856 GMT, sterling was down less than 0.1% against the dollar at $1.2920.
The pound has largely ignored the ongoing Brexit talks, with some analysts saying that even if a Brexit deal were confirmed, it would be unlikely that sterling would benefit handsomely.
Britain’s economy has also struggled because of the COVID-19 pandemic.
The Bank of England is weighing how it could cut rates below zero if needed, and is also expected to ramp up its bond-buying stimulus programme at its meeting next week.
Sterling was stronger against the euro by 0.05% at 90.27 pence.
“Euro-sterling remains immune to global factors and with rising odds of an eventual UK-EU trade deal, the upside to the cross should be fairly limited,” analysts at ING said.
“Spikes in euro-sterling should be faded to position for a break below the 90 pence level.”
Reporting by Ritvik Carvalho; Editing by Mark Heinrich