GBP price, Brexit news and analysis:
- The chances of the UK and the EU reaching a post-Brexit trade deal seem to be falling, weakening GBP/USD.
- The UK is also planning to amend the UK-EU divorce agreement, and social gatherings of more than six people are to be banned in the UK as coronavirus cases rise.
- As the markets see a general move towards safe havens, GBP/USD has already fallen to its lowest for six weeks but further losses now seem likely.
GBP/USD weakness to persist, Brexit in focus
GBP/USD looks set for further losses despite having dropped already below 1.30 to its weakest level since late July. Now, a return to the July 14 low at 1.2480 cannot be ruled out as a medium-term target.
GBP/USD Price Chart, Daily Timeframe (June 26 – September 9, 2020)
Chart by IG (You can click on it for a larger image)
From a fundamental perspective, several factors are undermining the British Pound, including more negative sentiment generally that has boosted safe havens such as the US Dollar. In addition, the UK seems prepared to break the Brexit withdrawal agreement with the EU in a way a government minister has admitted could break international law. That has raised the chances that a UK-EU trade deal will not be agreed by the October deadline.
Moreover, Covid-19 infections are rising sharply again in the UK, prompting the government to ban social gatherings of more than six people from Monday – another negative factor for GBP/USD.
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— Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex