- GBP / USD is facing rejection near the 1.3200 level and is witnessing a modest pullback on Monday.
- Ireland’s Coveney comments revive fears of a no-deal Brexit and weigh on the British pound.
- A dovish USD price action helps limit the slide ahead of Bank of England Governor Andrew Bailey speech.
The pair GBP/USD has fallen around 65 pips at the start of the European session on Monday and has reached new daily lows around the region of 1.3130 in the last hour.
The pair has built on last week’s strong positive move of over 300 pips and gained some traction during the first half of the trading action on the first day of a new week. The impulse has been due exclusively to a softer tone around the US dollar, which has come under pressure from a combination of factors.
The victory of Democratic candidate Joe Biden in the US presidential election he removed some of the uncertainties. Meanwhile, The possibility of a divided Congress has fueled speculation that the Fed will be forced to loosen further to support the economy. hit by COVID-19. This, in turn, has continued to put some pressure on the dollar.
However, the persistent uncertainties related to Brexit they have prevented the bulls from opening aggressive positions and limited any further gains for the GBP / USD pair. Meanwhile, the latest move to the downside at the start of the European session has come after comments from Irish Foreign Minister Simon Coveney, who has said that we are at the end of the game now in the Brexit talks.
Given that the British and EU negotiators still they have not reached a compromise on key points such as the so-called level playing field, fisheries and state aid rules, the remarks have revived the markets’ fears of a no-deal Brexit. This comes ahead of a vote on the UK’s internal market bill in the House of Lords, which has been taking its toll on the British pound.
It is worth reporting that another source of conflict between the UK and the EU is British Prime Minister Boris Johnson’s determination to go ahead with controversial legislation. The so-called Internal Market Bill violates international law in a “specific and limited way” and nullifies the provisions of the Brexit Withdrawal Agreement related to Northern Ireland.
However, the decline remains supported, at least for now, as investors seem reluctant to open aggressive positions and prefer to wait for an official statement on Brexit. Aside from this, investors will also turn Monday’s attention to a speech scheduled by Bank of England Governor Andrew Bailey and Chief Economist Andy Haldane.
Credits: Forex Street
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