- The pound is falling on all fronts and against the dollar it has the worst day in months.
- GBP / USD rebounded to 1.3280 after bottoming out at 1.3220, the lowest since November 19.
GBP / USD cut losses in the last few hours but is still on track to have one of the worst days in months. The price bottomed at 1.3220, the lowest in two weeks, before bouncing to 1.3280. It is trading just above 1.3250, below the floor of the previous two weeks.
The fall is due to a pound crash across the market. The lack of a Brexit deal and an unclear outlook on this issue triggered sales of the British currency on all fronts. Stock markets in the world are falling which adds some more pressure.
The European Union’s top Brexit negotiator Michel Barnier briefed the bloc’s national ambassadors on Monday and was reportedly very pessimistic about the possibility of sealing a trade deal with the United Kingdom. Separately, The Sun reported that UK Prime Minister Boris Johnson is ready to withdraw from Brexit talks if the EU refuses to back down on his last-minute demands. In Brussels the last day to agree is seen for Wednesday, before the summit on Thursday and Friday.
A UK official would have said Brexit talks are likely to end today if there is no further progress. With less than four weeks to go to the end of the Brexit transition period in December, uncertainty about the end is weighing on the pound. Negotiations are in progress again right now, with Frost and Barnier meeting.
As for the dollar, risk aversion is favoring it. The greenback is rising on all fronts adding extra weakness to GBP / USD. The dollar index (DXY) rose to 91.23, reaching highs since Wednesday. The only relevant economic calendar data in the US is consumer credit data.
Technical levels
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