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Pound Falls As Investors Unwind Long Positions on Post-Brexit Trade Deal

December 28, 2020 at 16:56 by Simon Mugo

A column of 50 British pound notes

Today, the Sterling pound fell against the dollar as investors turned bearish on the currency following the post-Brexit trade deal reached on Christmas Eve. The GBP/USD currency pair fell today amid thin trading conditions as the UK and European markets remained closed in honour of Boxing day celebrations.

The GBP/USD currency pair today fell from a high of 1.3575 in the Asian market to a low of 1.3428 in the early American session and was trading near these lows at the time of writing.

The currency pair remained under selling pressure despite the upbeat investor risk appetite that dominated the markets after US President Donald Trump signed the $2.3 trillion stimulus and spending deal reached by Congress. The pound did not benefit from the upbeat market sentiment as investors continued to unwind their long positions following the Brexit deal. News that the European Union ambassadors had approved the post-Brexit deal’s implementation on a provisional basis had a muted impact on the pair. Investors were expecting the development, which is why the sterling barely moved after the news.

Rising coronavirus cases in the UK also contributed to the cable’s decline as investors price in the extension of lockdown measures up to February 2021, including UK schools’ closure. The pending resolution of the Gibraltar border movements with Spain also hung a dark cloud over the pound as hard border appears very likely.

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 1.3441 as at 16:55 GMT having fallen from a high of 1.3575. The GBP/JPY currency pair was trading at 139.63 having dropped from a high of 140.57. 

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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