Home GBP GBP/USD: Pair Falls As No Trade Deal Brexit Looking Increasingly Likely

GBP/USD: Pair Falls As No Trade Deal Brexit Looking Increasingly Likely

7th September 2020

8^th round of Brexit talks set to begin this week, hopes for a breakthrough are low
UK government sets 15^th October as a deadline for a deal
US Dollar surged following a larger than expected drop in unemployment
US closed in observance of Labour Day public holiday

The Pound US Dollar (GBP/USD) exchange rate is trending lower at the start of the week, adding to losses from the previous week. The pair shed -0.5% last week settling on Friday at US$1.3282, after hitting an 8-month high of US$1.3480 earlier in the week.

Check real time GBP to USD exchange rate

At 06:15 UTC, GBP/USD trades -0.4% at US$1.3232, this is at the bottom of the daily traded range.

The Pound is under significant pressure as Brexit comes back into full view. The 8^th round of Brexit talks are due to start this week and expectations of a breakthrough are low.

Brexit trade talks have been in deadlock for months as the UK refuses to give up autonomy over state aid and fishing. Meanwhile the EU are accusing the UK of wanting all the benefits of being in the EU without any of the obligations.

Heading into the latest round of talks, the government has thrown a number of political grenades across the channel threatening the chances of a trade deal ever being agreed. Government plans to introduce domestic legislation which partially overrides the Brexit divorce deal could throw a serious spanner in the works.

Prime Minister Boris Johnson has set the date of 15^th October for a trade deal to be agreed, or the UK will leave on unfavourable World Trade Organisation terms.

The US Dollar rallied hard at the end of last week thanks to upbeat US jobs data. Whilst the headline job creation figure was in line with expectations at 1.37 million hires, the unemployment rate unexpectedly dropped to 8.4%. Analysts had been expecting a fall to 9.8%. The data shows that the US labour market remains in recovery mode.

Despite the strong data, the fact that Congress is still failing to agree additional fiscal stimulus for the US continues to drag on the greenback.

The US Dollar is expected to trade quietly today owing to a public holiday, Labour Day, in America.