The Pullback Continues in the GBP, as Markets’ Attention Turns to Brexit After the Elections
[[GBP/USD]] surged higher in October after Boris Johnson reached a Brexit deal with the EU. The deal was rejected by the British Parliament, but chances were that it would pass, after the general elections in the UK. Conservatives won a clear majority and GBP/USD surged more than 5 cents higher at the end of last week.
But, Brexit jitters are coming back and we are seeing a deep retrace in this pair. The UK Prime Minister spokesman, James Slack, held a speech a while ago and he killed any hopes for those who were thinking of another extension, beyond December next year. Below are some of his comments:
- Election manifesto was explicit in ruling out any extension of transition period
- Government wants to start negotiating future trade relationships as soon as possible
- Intend new relationship with EU to be ready to start by January 2021
- In all circumstances, we are leaving EU customs union and single market
GBP/USD has lost around 400 pips from the top last Friday and continues to slide lower after comments from Slack, who confirmed that 2020 is the last year for the UK in the EU, trade deal or no trade deal. The trade deal will be hard to reach within a year, hence the decline in the GBP, but anything can happen if they put their backs into it.
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