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Sterling Falls on Brexit Fears and Weak UK GDP Data, Later Rallies

September 11, 2020 at 12:55 by Simon Mugo

Many 20-pound notes

The Sterling pound today fell against the US dollar extending yesterday’s losses amid growing fears of a no-deal Brexit as both sides issue ultimatums. The GBP/USD currency pair has fallen for six of the past eight trading days as investors sell the pound as a hard Brexit appears very likely.

The GBP/USD currency pair today fell to a low of 1.2763 before reversing course and rallying to a high of 1.2865 and was trading in positive territory at the time of writing.

The currency pair fell yesterday after the UK published its Internal Market Bill, which contravenes the withdrawal terms it had agreed on with the EU. The fact that yesterday’s emergency meeting did not yield a positive outcome piled pressure on the cable. The release of the downbeat UK monthly GDP estimate for July, which came in at 6.6% versus the consensus estimate of 6.7% also dragged the pair lower. The upbeat UK industrial and manufacturing production report for July released by the Office for National Statistics could not stop the pound’s decline.  

The pair later recovered and rallied to its daily highs in the mid-London session, before falling heading into the American session. The release of the upbeat US consumer price index report for August by the Bureau of Labor Statistics saw the pair head lower.

The currency pair’s future performance is likely to be affected by geopolitical events over the upcoming weekend.

The GBP/USD currency pair was trading at 1.2818 as at 12:55 GMT, having recovered from a low of 1.2763. The GBP/JPY currency pair was trading at 136.08, having risen from a low of 135.58.

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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