Brexit headlines weighed heavy on the pound yesterday, causing Sterling to lose ground against both the U.S. Dollar and Euro. The main catalyst of Sterling’s downfall was the reports that Michel Barnier has told a private meeting of EU27 ambassadors that there may not be a trade agreement with Britain in place by the end of 2020. Barnier reiterated to the group that the main sticking points – fishing rights and level playing field – are still blocking progress.
GBPUSD depreciated by over 0.5% in yesterday’s session following the risk of a no deal increasing. Opening at 1.3397, cable experienced heightened volatility on the day, but was able to close just below where it opened, at 1.3391. After briefly surpassing the 1.34 mark before yesterday’s open, cable was unable to sustain itself at that level and traded in the 1.33 range throughout the session. After the close the pair spiked again and traded through the night above 1.34.
Monday also proved to be a testing session for GBPEUR. The pair opened at 1.1189 and closed below that at 1.1123. It is worth noting that at 08:00 today, as fears of a no deal increase, GBPEUR lost its grip on 1.11 and has fallen into the 1.10 range.
In an interview with Sky News yesterday, Michael Gove expressed his disappointment that more progress has not been achieved in recent talks and noted that talks are likely to go “down to the wire”. Speaking on the ‘all-important’ matter of fishing rights, Gove asserted that “the EU will want to take the lion’s share of the fishing in our waters, which is just not fair given that we are leaving the EU.” Gove made clear that the UK no longer intendeds to be “tied to their [EU’s] way of doing things”.
After reaching fresh 2-month highs of 1.1945, EURUSD has gone from strength to strength, pushing beyond the 1.20 mark yesterday. EURUSD opened Monday morning at 1.1972 and was able to reach 1.20 by 15:15. The pair maintained its form and managed to close the day off at 1.2038.
