The British pound today fell to new 1-week lows against the US dollar after the UK Prime Minister confirmed that she had requested for a short Brexit extension from the EU. The GBP/USD currency pair had traded sideways before heading lower amid mostly neutral investor sentiment and a positive reaction to the latest UK inflation report.
The GBP/USD currency pair today fell from an opening high of 1.3270 to a weekly low of 1.3146 before retracing some of its losses.
The pair’s sudden spike lower was triggered by news headlines confirming that Theresa May had requested an extension of Article 50 up to June 30th and not a day later. Investors reacted negatively to the short extension as it may not be enough to secure a Brexit deal. Previously, the pair had a slight positive reaction to the mixed UK CPI report by the Office for National Statistics in the early London session. The headline print for February came in at an annualized 1.9% beating consensus estimates by 0.1%, while the core print was recorded at 1.8% missing expectations by 0.1%. The producer price inflation prints missed expectations, while the retail price index prints met consensus estimates.
The pair retraced some of its losses in the American session as market sentiment shifted in favor of the pound. The retracement could also be attributed to a technical price pullback.
The currency pair’s short-term performance is likely to be influenced by the FOMC rate announcement scheduled for 18:00 GMT.
The GBP/USD currency pair was trading at 1.3175 as at 17:21 GMT having fallen from a high of 1.3270. The GBP/JPY currency pair was trading at 146.89 having dropped from a high of 148.08.
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