The GBPUSD pair continues to move lower as the dollar remains steady. The market is in a wait and watch mode in most cases as we enter the last month of the year but in the case of the pound, we are seeing an increase in volatility as the developments in the political circles in and around the UK come in thick and fast. This has led to some weakness in the pound and this is what we are seeing over the last couple of days.
GBPUSD Under Pressure
Over the whole of last week, we saw the pound being one of the strongest currencies around as the prospect of a deal being concluded in the Brexit talks helped to keep the bid under the pound. This led the pound higher into the 1.35 region and it looked as though the pair was set to move into the 1.38 region once the details of the deal were announced in a week or two. It appeared only a matter of time, at that point, that the deal would be announced and everyone would go home for the year end in a happy mode.
But this week, the hopes of a deal being reached were doused as the DUP party scuttled the deal by their opposition to the Irish borders. This basically poured cold water on the plans of the UK PM May and set her back both domestically and internationally as well. It appears a tough ask once again to bring in any kind of deal in the short term and this is clearly weighing on the pound this week as the GBPUSD pair has dropped back to the 1.34 region during the course of the week.
Looking ahead to the rest of the day, we do not have any major from the UK as the focus shifts to the dollar and the ADP employment report later in the day today. The services PMI data from the UK came in weaker yesterday and this only added to the pressure on the pound and if the ADP data comes out stronger, then we are likely to see the pair getting even more weaker in the short term.
This article was originally posted on FX Empire