The pound fell against the dollar on Wednesday as Brexit talks became the focus for investors once again. European policymakers have warned that the UK could leave the EU without a deal at the end of 2020. The Head of the European Commission, Ursula von der Leyen, said that it would be “basically impossible” to conclude all necessary parts of the negotiations before the end of 2020.
With Prime Minister Boris Johnson indicating very little desire for an extension, this has given investors cause for concern. The pound fell 0.2% against the dollar but remained flat against the euro. Despite these concerns there is still a decent number of investors with net long positions in the British currency, believing that the uncertainty will subside in the pounds favour.
GBPUSD opened at 1.3153 and fell across the day, reaching a low of 1.3087 and closing at 1.3105
GBPEUR opened at 1.1794 and fell and reached a morning high of 1.1823 but these gains were short lived as the pair closed almost unchanged 1.1791
The dollar made gains against its safe haven rivals on Wednesday as tensions appeared to ease slightly between the US and Iran. President Donald Trump stepped back from angry rhetoric following Iranian missile strikes on US bases in Iraq, saying that the US did not necessarily have to respond. This has brought relief to global markets who feared an escalation to war.
The dollar index gained 0.3% and was also boosted by higher than expected pay roll data for December. Meanwhile the euro was down 0.4% against the dollar.
EURUSD opened at 1.1152 and fell steadily across the day to close at 1.1115