FX.co ★ GBP/USD and EUR/USD: Another failed meeting for Brexit led to a sharp collapse in the British pound. Meanwhile, euro is struggling in which direction to go in the market.

Pound collapses again after another failed meeting for Brexit.

Yesterday, the European Union demanded the UK to withdraw the bill that undermines the foundations of the Brexit agreement, the very law in which Boris Johnson renounces the rigid borders of Northern Ireland and the Republic of Ireland

According to the EU, this condition completely negates the foundations of the Brexit agreement signed last year, as if passed, the bill would invalidate the provisions that impede the creation of border between the two countries.

Thus, the EU gave an ultimatum to cancel the bill before the end of September, else they may take legal measures that would put negotiations at risk.

However, Boris Johnson has already announced that he does not intend to retreat, which increases the likelihood of a no agreement, and accordingly, tough Brexit in December.

Market reaction to such a situation brought GBP / USD down in the market, which could reach price levels 1.2725 and 1.2670 today. The quote will only go towards 1.2940 and 1.3020 if GBP / USD is able to consolidate above 1.2890.

EUR / USD

Euro initially rallied amid unchanged ECB policy, but then went back down due to good reports on US PPI.

At the ECB meeting yesterday, chairman Christine Lagarde drew attention to the strong economic recovery of the eurozone, having been in line with expectations. However, significant uncertainty still persists, so the monetary policy will remain soft for quite a long time.

Among the main risks for the EU is the recent surge of coronavirus infections, which will continue to impede economic recovery.

Meanwhile, the better-than-expected PPI of the United States helped increase demand for the US dollar. According to the report, the index grew 0.3% in August, while the core index of final demand (Core PPI), which does not take into account volatile categories, increased by 0.4%.

Consumer price index (CPI), which is also important for the US, is scheduled for release today, and any strong performance on it will lead to the strengthening of the US dollar as well.

As for the state of the US labor market, latest data on claims for unemployment benefits continues to point to a gradual stabilization. According to a report from the US Department of Labor, initial applications were at 884,000 for the week of August 30 to September 5, while secondary applications have risen to 13.4 million.

As for the technical picture of EUR/USD, the bears were able to return the quote to 1.1850, below which trading is now underway. Thus, the bulls have to push above 1.1850 in order to reach the level of 1.2000. But, if the pressure on the pair persists, and it will increase if the quote moves below 1.1800, the bears will attempt to bring the quote towards 1.1755, and then towards 1.1710 and 1.1650.