The GBP/USD currency pair today posted massive losses on renewed Brexit worries after comments from the EU’s chief negotiator, Michel Barnier. The possibility of a hard Brexit was further confirmed by comments from the UK’s Brexit minister, David Davis.
The GBP/USD currency pair lost over 140 points at the height of its decline in the hours following the joint press conference.
The pound’s massive decline against the US dollar was occasioned by comments made by the top Brexit negotiators regarding the state of the negotiations at a joint press briefing. The EU’s Barnier stated that the negotiations had reached a deadlock and that the two sides had not made much progress. The UK’s David Davis confirmed Barnier’s position by stating that the UK government was planning for all scenarios in case the UK does not get a good deal. These comments reignited fears of a hard Brexit.
The stronger demand for the US dollar as tracked by the US Dollar Index, which posted a modest recovery from two-week lows by hitting a high of 93.18, also contributed to the pair’s decline. The release of positive initial jobless claims data by the Department of Labor, which exceeded expectations by coming in at 243,000 versus the expected 250,000, also boosted the greenback.
The currency pair’s future performance is likely to be affected by political events in the UK as well as tomorrow’s release of US advance retail sales data and CPI data.
The GBP/USD currency pair was trading at 1.3144 as at 13:29 GMT having dropped from a high of 1.3265 set at the beginning of today’s session. The GBP/JPY currency pair was trading at 147.64 having declined from a high of 149.07 earlier today.
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