GBP/USD plunges below $1.31 on Brexit concerns

The GBP/USD exchange rate plummeted on Friday as GBP investors were spooked by fresh Brexit uncertainty as well as concerns over the UK jobs market.

Meanwhile, Sterling opens this week stuck in a narrow range, with GBP/EUR flat at €1.1100 and GBP/USD stable at $1.3111. GBP/CAD is muted at C$1.7249, while GBP/AUD and GBP/NZD hold steady at AU$1.8265 and NZ$2.0054, respectively.

Coming up this week, will we see renewed concerns over the coronavirus pandemic rock currency markets this week?

What’s been happening?

The pound slumped at the end of last week, with Sterling sentiment undermined by renewed Brexit jitters and rising concerns over the UK’s impending jobs crisis.

The latest round of trade talks between the UK and EU ended in stalemate again, weighing on the pound as GBP investors were unnerved by EU chief negotiator Michel Barnier’s suggestion that a deal ‘seems unlikely’ at this stage.

In addition, the UK’s latest PMI figures highlighted an acceleration of jobs cut this month, in spite of the UK’s private sector expanding at its best pace since 2013.

On the other side of the channel, the publication of the Eurozone’s own PMI figures dragged on the euro as they indicated that the bloc’s economic recovery had already begun to stall amid the resurgence of coronavirus cases across Europe.

The US dollar, meanwhile, came out on top on Friday as the widespread weakness of its peers, better-than-expected PMI data, and existing home sales figures bolstered the appeal of the ‘Greenback’.

What’s coming up?

Turning to this week’s session, a light data calendar could see coronavirus concerns begin to dominate market sentiment again.

In Europe, the resurgence in coronavirus cases shows no sign of slowing, potentially dragging the euro lower if any countries in the Eurozone hint that some lockdown restrictions could be re-introduced.

Concerns over the pandemic and its impact on global growth may also drive investors to the safe-haven US dollar this week, although any gains could be tempered by growing US political uncertainty and the ongoing stimulus impasse.

Finally, Sterling may struggle to find support this week as renewed Brexit jitters look to limit the appeal of the pound.