British Pound Back under Pressure as Brexit Resurfaces

The British pound is under pressure, once again, as the possibility of a hard Brexit is once again in the headlines and a possibility.

The United Kingdom is setting a hard deadline for quitting the European Union. This is reigniting fears of a no deal Brexit in place, at least one with a free trade agreement.

Overnight the British pound saw its steepest percentage decline in over a year. This loss wiped out all gains seen after Prime Minister Boris Johnson’s commanding victory seen last week as his Conservative Part won a majority in the parliament.

PM Johnson sole campaign was to “get Brexit done.” He has set a hard completion for this at the end of 2020 with or without a trade agreement in place.

The GBP/USD currency exchange rate which was trading above 1.35 after Johnson’s parliamentary win is now back below 1.3133 where it was before the December 12 election in the United Kingdom.

The EUR/GBP currency exchange rate has also seen the British pound erase all of its election gains and is now trading around 0.8492.

The dollar index, which measures the dollar against a basket of six Forex units, was trading higher during the Asian trade session. Safe haven currencies like the Swiss franc also were supported.

British Pound Traders Monitor Brexit Developments Closely

One of the senior ministers to PM Johnson, Michael Gove, was asked to comment if the UK Government would rule out any possibility of an extension. He responded “exactly, absolutely.”

Brussels, for its part is saying that the time table for the United Kingdom to exit the European Union is “rigid.” They feel this could limit the scope of any trade deal.

On the economic calendar today is German business sentiment and Canadian consumer price index. European Central Bank Chief Christine Lagarde is scheduled to speak at 8:30 am and FOMC members will also deliver commentary.