The British Government published its latest Brexit position papers Monday, urging the European Union not to separate goods from services in the Brexit negotiations, and the market impact was interesting – there wasn’t one.
Instead, GBPUSD traded sideways in a narrow range, as it has for the last few days following its sharp falls earlier this month.
Chart: GBPUSD Hourly Timeframe (August 2017)
The reaction, or lack of one, illustrates how Brexit has ceased to be a major concern for UK asset prices. Instead, the focus is back where it usually is: on the economic data and their likely effect on the monetary policy decisions of the Bank of England.
For sure, Brexit could return as an important factor at any time, particularly once trading returns to normal after the summer holidays, but for now it seems like a side show. That leaves traders free to focus on what seems to be a slowdown in UK economic activity and therefore the fading likelihood of a tightening of UK monetary policy.
Against this background, GBP will likely come under further pressure in the days ahead once the current consolidation phase is over.
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