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Brexit dispute worsens but pound posts gains

GBP/USD has posted gains in Thursday trade. Early in the North American session, the pair is trading at 1.2963, up 0.40% on the day.

Pound rally continues

GBP/USD has not had a losing daily session since September 23rd, as the pound has taken advantage of a struggling US dollar. The pair is up 1.7% so far this week and is within striking distance of the symbolic 1.30 level, which was last breached on September 16th.

EU starts legal proceedings over Brexit

The torturous Brexit process has taken on yet another twist, as the EU has announced it is launching legal action against the UK after London refused to remove draft legislation that breaches the withdrawal agreement that both sides signed in 2019. The UK has admitted that sections of the Internal Market Bill breach the withdrawal agreement, but has argued that the bill is required in order to protect trade between different parts of the UK. An ultimatum from the EU to remove the bill expired on Wednesday, leading the EU to formally contest the bill. The British pound has not reacted negatively to the EU move, but if tensions over Brexit worsen, nervous investors could lose confidence in the pound.

The latest crisis between the EU and the UK has overshadowed the most recent British economic data. The second-estimate GDP for Q2 declined by 19.8%, which was upwardly revised from 20.4% in the initial estimate. The manufacturing sector continues to recover, as Manufacturing PMI came in at 54.1 in September, down from 55.2 beforehand. The index has been in expansionary territory for four straight months, reinforcing that the economy is recovering from the devastating economic impact of Covid-19.

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GBP/USD Technical

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher [4]

Currency Analyst at Market Pulse [5]
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

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