The British pound today dropped to new lows against the US dollar after the European Union released a tough draft Brexit withdrawal agreement. The UK Prime Minister rejected the deal saying that no UK leader would ever sign such a one-sided deal with the EU triggering a massive sell-off in the cable.
The GBP/USD currency pair lost over 100 points to decline from a high of 1.3917 to a low of 1.3807 in the mid-European session.
The currency pair was trading sideways from the Asian session into the early European session before the release of the draft Brexit text by the EU. The fact that the draft text was approved today indicates that the EU is serious about its tough stance towards Brexit. The EU’s Chief Negotiator Michel Barnier further stated that Brexit negotiations should proceed at a faster rate and that a transition period was not guaranteed. Theresa May‘s response to the draft text also served to increase market fears of a hard Brexit as she stated that the would never sign such a deal.
Several releases from the US docket such as the MBA mortgage applications for the week ending Feb. 23 in the early American session had minimal impact on the currency pair. The release of the US Q4 GDP data by the Bureau of Economic Analysis also had a muted impact on the pair.
The currency pair’s future performance is likely to be affected by tomorrow’s UK consumer credit report and the US PCE report.
The GBP/USD currency pair was trading at 1.3811 as at 14:37 GMT having declined from a high of 1.3917. The GBP/JPY currency pair was trading at 147.82 having dropped from a high of 149.51.
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