Pound Falls on Weak UK Manufacturing Activity Amid Brexit Fears

The  British pound today fell to  new lows against the  US dollar based on  the  uncertainty surrounding the  Brexit negotiations as  both the  EU and  the  UK stick to  their opposing positions. The  GBP/USD currency also headed lower following the  release of  the  latest UK manufacturing data, which revealed zero expansion in the sector.
The  GBP/USD currency pair today dropped from a  high of  1.2934 in  the  Asian session to  a  low of  1.2854 in  the  mid-European session.
The  currency pair was negatively affected by  the  comments made by  the  Chief EU negotiator Michel Barnier over the  weekend where he stated that he opposes the  UK’s Brexit plan. Most investors interpreted this as  a  negative for  the  pound given that British Prime Minister Theresa May insists on sticking with her current Brexit plan. This news was especially negative given that investors’ hopes for  a  smooth separation were raised last week following the  resumption of  talks between the  EU and  the  UK.
The  release of  the  Markit/CIPS UK Manufacturing PMI in  the  early European session also drove the  pair lower as  the  print missed expectations to  come in  at  record 25-month lows. The  PMI print came in  at  52.8 in  August versus the  expected 53.9. Given that today was Labor Day in  the  USA, the  pair’s performance was largely driven by  the  Brexit developments.
The  pair’s performance is likely to  be influenced by  tomorrow’s UK Construction PMI and  the  US ISM Manufacturing PMI.
The  GBP/USD currency pair was trading at  1.2880 as  at  16:15 GMT having dropped from a  high of  1.2934. The  GBP/JPY currency pair was trading at  143.01 having declined from a  high of  143.63.

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