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Pound Crashes As Brexit Talks Turn Sour Amid EU/UK Hardline Positions

December 7, 2020 at 19:49 by Simon Mugo
50 pound notes and some coins on the UK flag

The Sterling pound today crashed against the dollar amid a deluge of negative Brexit headlines as both the EU and UK reiterated hardline positions. The GBP/USD currency pair’s plunge today was driven by reports of new problems in the Brexit talks jeopardizing the likelihood of a deal before December 31.

The GBP/USD currency pair today crashed from a high of 1.3437 in the Asian market to a low of 1.3225 but had recouped almost half of its losses at the time of writing.

The currency pair fell initially after news broker that Michel Barnier the top EU negotiator had told EU national representatives that three outstanding issues in the Brexit talks could make the two sides not reach a deal. A UK government official quickly countered with news that British Prime Minister Boris Johnson was ready to end the talks today if there was no progress. The pair recouped some of its losses after PM Johnson and European Commission President Ursula von der Lyen talked on phone and agreed to meet in person later this week to resolve the three outstanding issues and hopefully finalise a deal.  

Reports that the US was preparing new sanctions against at least twelve Chinese officials due to their role in Hong Kong elections also fueled the cable’s decline. The greenback’s resurgence as tracked by the US Dollar Index, which hit a high of 91.23 today also drove the pair lower.

The currency pair’s future performance is likely to be affected by Brexit headlines and US dollar dynamics.

The GBP/USD currency pair was trading at 1.3393 as at 19:48 GMT having recovered from a low of 1.3225. The GBP/JPY currency pair was trading at 139.24 having fallen from a high of 139.81. 

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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