Pound Sterling Searches for Support as Brexit Bill Roils GBP
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POUND STERLING SWOONS AMID LATEST BREXIT DRAMA SURROUNDING INTERNAL MARKET BILL
- Pound Sterling has weakened sharply so far this month amid fresh Brexit uncertainty
- Brexit negotiations could collapse with the passage of PM Johnson’s Internal Market Bill
- GBP price action is under pressure as the Withdrawal Agreement hangs in jeopardy
The Pound Sterling searched for support on Monday as UK politicians gathered to debate and vote on the Internal Market Bill backed by Conservative Prime Minister Boris Johnson. GBP price action has been hammered lower over recent trading sessions due to the resurgence of Brexit uncertainty, which now looks set to intensify further. This follows British MPs moving the legislation process forward after just voting 340 to 263 in favor of the Internal Market Bill.
GBP/USD PRICE CHART: DAILY TIME FRAME (21 FEB TO 14 SEP 2020)
GBP/USD changed little in response to the latest Brexit development, but the headlines crossed market wires during illiquid trade between the US close and APAC open. That said, the Pound Sterling could resume its sharp slide owing to increased friction between UK and EU officials likely to ensue.
Brussels has already threatened to take legislative action against the UK owing to the proposed Internal Market Bill as legal experts claim it would breach international law and undermine the Brexit Withdrawal Agreement. Interestingly, retail FX traders appear confident the worst has passed.
EUR/GBP PRICE CHART: 2-HOUR TIME FRAME (01 SEP TO 14 SEP 2020)
Though the Internal Market Bill still requires passage by the House of Lords, support from majority of British MPs could exacerbate tension between the UK and EU. Looking ahead, this might encourage FX market participants to command a higher risk premium for the Pound Sterling, which stands to weigh negatively on GBP price action.
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-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.