GBP/USD drops further, hits 1.3253 over Brexit fears

The British pound suffered further in the foreign exchange markets on Monday due to fears about the impact that Brexit could have.

The currency was down by a fifth of a percentage point at one stage over the day in its pair with the greenback – a development that extended the currency’s earlier losses.

It was spotted at $1.3253 at one stage.

The problems for the pound have arisen after Britain appeared to be unable to make progress negotiating a trade deal with the EU.

Some reports suggest that officials at the EU want to have the power to control some of Britain’s legislation even once the withdrawal has been completed.

This has been interpreted badly by London, where the Conservative government is keen to be seen to keep as much autonomy as possible.

The fundamental outlook for the next few days did not appear to be much more positive.

A report published in the news on Monday suggested that senior business figures in the UK are continuing to fear the prospect of a no-deal Brexit – specifically in the context of the post-coronavirus slump.

Across the Channel, the single European currency was preparing for the key event of the week – a meeting of the European Central Bank on Thursday.

While there is considered to be little chance of an interest rate cut happening, the outcome of the Governing Council’s decision is likely to be scrutinised for signs

It was spotted at $1.18395 in its pair against the greenback at one stage.

The dollar was also seen at 106.37 against the Japanese yen.

The recent tumult in Japanese politics following the resignation of the country’s long-serving Prime Minister Shinzō Abe appeared to be coming to an end.

The Chinese yuan also saw little dramatic change over the course of the day.

In its pair with the US dollar, the offshore version of the currency was spotted at 6.8345.

In a sign that risk sentiment may be creeping back into the markets, meanwhile, the dollars of Australia and New Zealand appeared to be on the rise.

The Australian dollar went up to $0.72895 at one stage.

The Kiwi dollar, meanwhile, was spotted at $0.6711 in its dollar pair.

For the most part, the central banking focus for the week is currently on the euro and the potential decisions of the European Central Bank.

However, there will also be an interest rate reveal from the Bank of Canada.

This is expected to arrive on Wednesday.

Most analysts suspect that the Bank of Canada will choose to preserve interest rates at their current level of a quarter of a percentage point.

The decision is due at 2pm on Tuesday.

Ahead of the decision, the Canadian dollar traded at just above C$1.30 at one stage on Monday.