Pound Falls to New 5-Week Lows as Brexit Headlines Trigger Despair

The Sterling pound today fell to new 5-week lows as talks between Britain and the EU appeared to have hit a wall given today’s events. The GBP/USD currency pair today fell after reports that a phone call between Boris Johnson and the German Chancellor had made a Brexit deal almost impossible.
The GBP/USD currency pair today fell from a high of 1.2302 in the early London session to a new 4-week low of 1.2196 before trading sideways during the American session.
The currency pair attempted to rally during the Asian session amid subdued investor sentiment but quickly headed lower as the London session got underway. The negative Brexit headlines such as the phone conversation between Angela Merkel and Johnson’s yielding a negative result drove the pair lower. A statement by Irish foreign minister Simon Coveney indicating that the British government was not committed to negotiating a Brexit deal also affected the pair. Other reports indicated that bureaucrats at the EU, including Michel Barnier, were not hopeful that an agreement could be reached by the October 31 deadline. Investors remained worried about the growing likelihood of a no-deal Brexit come October 31st.
The cable’s movements were primarily driven by Brexit headlines, but it stopped falling after the release of the weak US producer price index report for September. According to the Bureau of Labor Statistics, US PPI contracted by 0.3% versus the expected 0.1% increase.
The currency pair’s future performance is likely to be affected by Brexit headlines and Jerome Powell’ speech later tonight.
The GBP/USD currency pair was trading at 1.2202 as at 18:12 GMT having fallen from a high of 1.2302. The GBP/JPY currency pair was trading at 130.90 having dropped from a high of 132.12.

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