GBP price, Brexit news and analysis:
- GBP/USD and the GBP crosses will likely suffer further losses as the EU and the UK continue to bicker on their relationship post-Brexit.
- As a new round of talks begins, the UK is stepping up its no-deal preparations and is reportedly tinkering with the withdrawal agreement already reached.
GBP/USD under downside pressure
Indications that the EU and the UK are moving even further apart in the negotiations on their post-Brexit relationship will likely lead to further losses for GBP/USD and the GBP crosses even though the latest spat could just be posturing, and a deal could yet be reached.
The Brexit talks are underway again in London this week and the UK has set a deadline of October 15 to strike a trade deal with the EU. It has also warned the EU that it is gearing up preparations to leave without a deal.
Moreover, the UK is reported to be planning new legislation to override part of the withdrawal agreement signed in January, and while this turbulent background has already weakened GBP/USD there are few signs yet that a recovery is imminent.
GBP/USD Price Chart, Two-Hour Time Frame (September 1-8, 2020)
Chart by IG (You can click on it for a larger image)
Moreover, according to data from Reuters, Brexit nerves have boosted GBP/USD implied one-month volatility to 10% for the first time since mid-June. This implies a turbulent few weeks for traders in the pair who must decide whether the latest war of words is just rhetoric, and that a deal will be reached eventually, or whether the current implementation period will end without an agreement.
| Change in | Longs | Shorts | OI |
| Daily | 16% | -17% | -4% |
| Weekly | -2% | 3% | 1% |
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--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
