GBP traded mixed against its rivals in the European session on Tuesday with declines versus NZD and CAD, with gains versus USD and CHF, and flat versus JPY, EUR and AUD.

Talks between the UK and the EU over a Brexit trade deal continue. The EU’s chief negotiator Michel Barnier said yesterday that he would be in London until Wednesday to negotiate a deal with the UK, after which the talks will switch to Brussels. The European Commission said today that both sides are engaging intensively to try and reach a deal. However, analysts see that the pound is unlikely to get much should the agreement be reached.

Sentiment also remains impacted by the growing number of coronavirus infections and worries over tightened COVID-19 lockdown measures and their implications on economic growth, as well as the possibility of the imposition of negative interest rates by the BoE. 

In addition, market participants received disappointing data from the Confederation of British Industry (CBI), which showed that the UK retail sales balance plunged to -23 in October from +11 in September. That was the lowest reading since June. Economists had forecast the reading to decrease to 1. Retail sales volumes are expected to decline at a similar pace in November (-26). The report also revealed that orders placed on suppliers dropped steeply (balance of -39, from -14) and are seen to decrease at an even faster rate in the year to November (-48).