GBP / USD cuts early losses, trades modest gains above 1.2920

• GBP / USD fluctuated sharply on Brexit headlines on Friday.
• The US Dollar Index remains bearish after mixed US data.
• GBP / USD is still on track to break a two-week winning streak.

After moving sideways near 1.2900 during the Asian session, the pair GBP/USD it rose to a daily high of 1.2962 in the early European morning. However, with the British pound under heavy selling pressure on British Prime Minister Boris Johnson’s Brexit comment, the pair fell to 1.2866.

However, the risk appetite environment in the market made it difficult for the dollar to find demand in the second half of the day and allowed the GBP / USD to erase its losses. At time of writing, the pair was up 0.12% on the day at 1.2929.

“As the EU has seriously refused to negotiate, I have come to the conclusion that we should prepare for an Australia-style deal,” British Prime Minister Johnson said on Friday. Furthermore, a government spokesman said that trade talks with the EU had ended. However, the president of the European Commission, Ursula von der Leyen, reiterated that the EU continues to work for an agreement, but not at any price.

The USD remains on the defensive as Wall Street recovers

US data showed on Friday that September retail sales rose 1.9%. This reading beat market expectations for a 0.7% increase by a wide margin. On a negative note, the Federal Reserve reported that Industrial Production in September contracted 0.6%.

This data failed to impact market sentiment in a significant way and the major Wall Street indices opened in positive territory. For now, the Dow Jones Industrial Average and S&P 500 are up 1% and 0.65%, respectively, while the US Dollar Index is losing 0.1% to 93.68.