Pound Crashes as Johnson’s Government Pushes for Hard Brexit

The Sterling pound today crashed against the US dollar amid fears that Boris Johnson‘s government was pushing for a hard Brexit despite his parliamentary majority. The GBP/USD currency pair today fell to its pre-election lows as investors sold the pair following the release of a mixed UK jobs report ahead of Friday’s Brexit bill tabling.
The GBP/USD currency pair today fell from a high of 1.3299 in the Asian session to a low of 1.3099 and was trading near these lows at the time of writing.
The currency pair attempted to rally at the start of today’s session but made little headway as sellers stepped in and pushed it lower. The pair’s drastic fall was triggered by news that the UK government was considering a hard Brexit. Johnson’s government chose to eliminate the proposal to extend trade talks with the European Union past the official deadline of December 2020. The UK is set to leave the EU on January 31st but Michel Barnier, the EU’s chief Brexit negotiator, insists that comprehensive talks could extend into 2021. The opposition Labour Party has criticised the ruling Conservative Party of recklessness terming the move as unnecessary.
The release of the mixed UK labour market report for December by the Office for National Statistics also contributed to the pair’s decline. The release of the upbeat US building permits and housing starts data by the Census Bureau in the American session also drove the pair lower.
The currency pair’s future performance is likely to be affected by tomorrow’s UK inflation data and Brexit headlines.
The GBP/USD currency pair was trading at 1.3130 as at 17:5 GMT, having fallen from a high of 1.3299. The GBP/JPY currency pair was trading at 143.74, having dropped from a high of 145.72.

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