The pound continued to be under pressure for most of the day yesterday though the region around 1.3350 managed to hold the prices for now. The pressure came about due to the delay in thrashing out a deal for the Brexit and the moves since the beginning of the week have basically reversed the move higher that we saw in the prices over the last week.
GBPUSD Continues Under Pressure
Last week, the prices had risen under the hopes of a deal being thrashed out between the UK and the Euro leaders and this led the GBPUSD pair to push through to the 1.35 region and it looked as though the pair may also move towards the 1.38 region once the details of the deal were announced. The details were expected to be announced in a week or two but the confirmation of the deal and the movement of the talks to the phase 2 stage hinged on the agreement over the Irish borders.
Over the last weekend, we saw strong opposition to the Irish border agreement and this proved to be huge setback for the UK PM May as it threatened her position within her country as well. Talks are going on between the Irish and the UK leaders to get them to agree to the deal but unless that happens, the prospects of a Brexit deal are very dim. In fact, any issue with the Irish borders would also open up the possibility that the UK could walk out of the Brexit talks with no deal and that would not be good for the UK or the Eurozone.
It is this uncertainty that is weighing on the pound since the beginning of the week and has since caused the pair to move towards the 1.3350 region from above the 1.35 region at the beginning of the week. Looking ahead to the rest of the day, we do not have any major news from the UK or the Eurozone for the day today but we expect the political headlines to keep the pound under pressure.
This article was originally posted on FX Empire