Uncertainty Weighs the Pound on Britain’s Exit from the European Union

Toplines:
*The GBP / USD pair is at risk of extending its support in the near term at 1.2970.

*GBP / USD Current Price: 1.3004

The GBP / USD pair reached multiple week low of 1.2978 and ended the week on the 1.3000 level, as uncertainty about Britain leaving the European Union increased the burden of the pound. Concerns were activated by PM Johnson, as he ruled out the possibility of widening the timeframe for progress in 2020.

Better-than-expected UK data to support the British pound was ignored, as British GDP in the third quarter was revised to 0.4% from 0.3%.

On Friday, the British Parliament passed the draft withdrawal agreement, in preparation for the UK to leave the union by January 31. The bill will now go to the House of Lords and rely on it to pass it without challenges. Therefore, the market may view this scenario as negative, as it will raise the chances of going out without a deal. The United Kingdom will not release fresh data this coming week, amid the Christmas holidays.

The UK general elections on December 12 gave Prime Minister Boris Johnson’s Conservative party significant control in the House of Commons.

The road is currently clear for Brexit to be approved by the United Kingdom and the European Union, and that will become effective after January 31, 2020, at most.

Brexit Transition Phase
At this point, a transition period will begin, during which the UK and the European Union should define the structure of their future relationship.

However, at only eleven months long, this time seems too short to think of implementing the full chapter that Mr. Johnson looked for.

Except if it had to rely on procedures from the World Trade Organization, the United Kingdom might have the option to disclose its relations with the European Union through a long and sensitive procedure. Brexit is just the beginning.

Contrary to indicate the end of the British exit story from the European Union, the general political elections on December 12 shows only a phase in a long procedure. Just because there is a reasonable dominant side in the British Parliament for the British withdrawal from the European Union, which will happen after January 31, 2020, at most. At this point, an eleven-month transition period will begin, during which the UK and European Union should decide the pattern of their future relationship.