You've landed on our UK website.
Click here to visit our USA website.

If you are having difficulty locating the information you require, we're here to help. Just get in touch and we will do our best to assist you.

GBP/USD plunges to $1.31 on UK-EU Brexit tensions

currency-newsGBP/USD plunges to $1.31 on UK-EU Brexit tensions
The pound fell off a cliff in the first day of trade this week in the face of the growing risk of a no-deal Brexit.

Sterling remains on the back foot this morning, with GBP/EUR muted at €1.1123 and GBP/USD subdued at $1.3142. GBP/AUD has retreated to AU$1.8013, while GBP/CAD and GBP/NZD are rangebound at C$1.7213 and NZ$1.9636, respectively.

Brexit will remain in the spotlight through today’s session, potentially keeping the pressure on GBP exchange rates as the latest round of UK-EU trade talks get underway.

What’s been happening?

The pound experienced a significant sell-off at the start of the week as GBP investors became increasingly concerned the UK and EU will not reach a trade deal by the end of 2020 as the UK government sought to harden its stance on Brexit.

This included reports Boris Johnson is planning to override parts of the EU withdrawal deal, whilst also stating that if a trade deal is not reached by 15 October then both sides should ‘move on’.

The euro, meanwhile, trended in a narrow range on Monday as German industrial production figures printed below expectations in July, stoking concerns that Germany’s economic recovery is already slowing.

The US dollar also struggled to find momentum yesterday, with thin trading conditions due to the extended Labour Day weekend leaving the ‘Greenback’ without any strong directional bias.

What’s coming up?

Turning to today’s session, we can assume that Brexit jitters will continue to act as key catalyst in GBP exchange rates as the latest round of trade talks get underway.

Unsurprisingly, given the UK government’s new combative stance, optimism going into negotiations appears to be at an all-time low, with GBP investors holding out little hope that any meaningful progress towards a deal will be reached this week.

In the US, all eyes will be on Congresses’ return following a month long recess over the summer.

USD investors are hoping that today’s return will be marked by a renewed urgency to negotiations between Republicans and Democrats in regard to the next US stimulus package, with a continued deadlock likely to exert some pressure on the US dollar.

Finally, the publication of the Eurozone’s latest GDP release may limit any upside potential in the euro today as it is set to confirm the bloc suffered a record contraction in the second quarter.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

Check our exchange rate

Thanks, we'll be in touch.

Check your inbox - one of our currency experts will be in touch to complete your quote.

If you want see our online exchange rates straight away, simply register online & log in.