The British pound today spiked to new 5-month highs after UK Prime Minister Boris Johnson confirmed that the EU and UK had agreed on a new Brexit deal. However, the rally was short-lived as the GBP/USD currency pair quickly reversed all its gains as the Northern Irish DUP opposed the agreement.
The GBP/USD currency pair today spiked to a high of 1.2989 in the early London session from an initial low of 1.2751 before quickly falling back to trade near its daily lows at the time of writing.
The currency pair today rallied to its new highs after Jean-Claude Juncker, the President of the European Commission confirmed that the EU had agreed to a new Brexit deal with the UK. However, the Northern Irish DUP party headed by Arlene Foster quickly expressed their discontent with the agreement triggering the pair’s crash. Investors are now worried that the deal will not get parliamentary approval as the ruling Conservative Party needs the DUP’s support to pass the new deal. The release of the upbeat UK retail sales for September by the Office for National Statistics boosted the pair before the spike. The headline retail sales remained flat, while the core retail sales grew 0.2% beating expectation of a 0.1% decline.
A brief recovery by the greenback as tracked by the US Dollar Index, which recovered slightly from a low of 97.51, also contributed to the cable’s decline.
The currency pair’s future performance is likely to be affected by Brexit developments and US dollar dynamics.
The GBP/USD currency pair was trading at 1.2802 as at 13:08 GMT having dropped from a high of 1.2989. The GBP/JPY currency pair was trading at 139.01 having fallen from a high of 141.00.
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