The pound in free fall amid Brexit deal negotiations taking painstaking turn
On 8 September, GBP/USD lost 1.36% or 179 points, owing to the sudden crisis in the Brexit deal talks. With the rumors about the changes made to the Internal Market Bill circulating on the sidelines of Brexit talks on September 7th, it became publicly known that the Boris Johnson Conservative U.K. government was going to issue a new edition of the Internal Market Bill as a backup plan reserved for a no-deal Brexit on Wednesday, September 9th. The British government has even acknowledged that these changes "break international law in a very specific and limited way." In response, the EU threatened the U.K. with trade sanctions in case the new agreement was not withdrawn.
In response to such grim prospects in Brexit talks, GBP/USD continued slipping down through Thursday, 10 September, having fallen as low as 1.2773. With little economic data coming from the U.K. this week, there is limited positivity for sterling to count on; therefore, a further decline to 1.2689 is the likeliest near-term target.
As of the start of Friday's trading day, GBP/USD recovered some of its Thursday's losses, climbing as high as 1.2763, but then lost most of the gains and descended to 1.2725. On Thursday the pair lost 1.52% or 228 points, which is the largest loss since the 19th of March.
The Brexit deal is currently the main focus in the GBP/USD market and will continue to be the most important factor in the pricing of the pair at least until October 15th, which is the last day set by Boris Johnson for signing a trade deal. If the deal is not signed by then, the pound could see further losses against the greenback and other major currencies.
Author
Konstantin Anissimov
CEX.IO
Konstantin is a businessman with skills in corporate governance, strategic management, customer relations, partnership negotiations and international sales. Graduated the Executive MBA program at the University of Cambridge.
