The British pound today fell to new daily lows reversing all of yesterday’s gains as traders remained cautious ahead of Boris Johnson‘s visit to Germany. Most analysts are expecting the British Prime Minister to return empty-handed from his talks with the German chancellor Angela Merkel.
The GBP/USD currency pair today fell from a high of 1.2174 in the Asian session to a low of 1.2117 in the mid-London session and was near these lows at the time of writing.
The currency pair yesterday rallied higher after Angela Merkel said that the European Union should find a way to resolve the controversial Irish backstop plan. Investors were hopeful that the EU would renegotiate the Irish border issue, but reports earlier today indicated that the EU was not planning to abolish the Irish backstop plan. A close ally of the German Chancellor Florian Hahn told reporters that it was completely impossible for the EU to remove the backstop plan from any future Brexit deal. She equated Johnson’s demand for the scrapping of the plan to him trying to crash is head through a wall.
The currency pair’s decline was further accelerated by the greenback’s rally as tracked by the US Dollar Index, which fell in the early Asian session before rallying higher. Simon Coveney, the Irish foreign minister blamed the pair’s decline on Johnson’s Brexit demands.
The currency pair’s short-term performance is likely to be affected by the outcome of the meeting between Johnson and Merkel.
The GBP/USD currency pair was trading at 1.2137 as at 12:54 GMT having dropped from a high of 1.2174. The GBP/JPY currency pair was trading at 129.19 having fallen from a high of 129.66.
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