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British Pound Falls on Election Rumors as Hard Brexit Weighs

August 8, 2019 at 16:33 by Simon Mugo

A lot of pound sterling notes of varying valueThe British pound today fell to new weekly lows after the Sun published a report saying that Boris Johson was planning an election immediately after a hard Brexit. Investors were shocked at the news, which seemed to confirm that the Johnson administration had abandoned all plans to negotiate a deal with the EU.

The GBP/USD currency pair today fell from a high of 1.2182 in the early European session to a new weekly low of 1.2095 before retracing some of its losses.

The currency pair opened today’s trading with a bullish bias and rallied for three hours before retracing some of its gains. The pair held its gains into the early London session before commencing a sustained decline. The lack of any major releases from the UK docket meant that the pair’s performance was heavily influenced by news headlines. The prevailing risk-off sentiment limited the pair’s gains as investors remained cautious given the ongoing US-China trade war. Rumours of an impending no-confidence vote against Boris by rebels within the Conservative Party also weighed on the Sterling.

News reports indicating that Johnson was planning to stay on as Prime Minister even if he loses a confidence vote ruffled investors even as Dominic Cummings plans to bypass parliament and force a hard Brexit. The pair rallied higher in the American session after the release of weak US wholesale trade sales and inventories data.

The currency pair’s future performance is likely to be affected by tomorrow’s UK GDP data, Brexit, and geopolitical headlines.

The GBP/USD currency pair was trading at 1.2144 as at 16:32 GMT having recovered from a low of 1.2095. The GBP/JPY currency pair was trading at 128.84 having fallen from a high of 129.33.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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