GBP came under some fresh selling pressure on Monday, as market players took a very cautious view on the pound. Talks have begun between Britain and the European Union on their future relationship after Brexit.
Over 100 UK officials have headed to Brussels for these first round of talks with the European Commission, which are set to last until Thursday.
Prime Minister Boris Johnson has said he wants to move away from the EU and refuses to be bound by its rules or the jurisdiction of its top court — all necessary, in the EU's view, to ensure fair competition.
Commentary from both parties has been very much sour, as they remain equally stubborn on their own respective views of the relationship.
Markets are worried because Boris John has made it clear recently, that he is happy not have any agreement with the EU, if it is not in Britain's interests. A UK government spokesperson said over the weekend:
We will walk away in both cases if it is not a deal that suits the UK because one of the key reasons people voted to leave the EU was to have control over their own rules and regulations.
Negotiations will be taking place once every two or three weeks from now until the summer at least, alternating between Brussels and London - with the prime minister insisting a deal must be struck by the year's end.
What does this mean for GBP?
The market is already seeing some negative implications of Britain and the EU not agreeing on a deal. If we continue to have a lack of progress from the two and downbeat comments hitting the newswires, expect GBP to further sell-off. The theme will likely remain of selling GBP rallies; vulnerabilities appear to be very much tilted to the downside.
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