RedFX: GBP Special (or not so..)

This afternoon, GBP came under a renewed selling pressure and GBP/USD slumped to its lowest level since late July - down 0.67% on the day at 1.2900.

GBP/€ keeps pushing the 1.1000 level, with many thinking a break may occur in the near-future.

The UK's Internal Market Bill showed that the British government acknowledges that some powers conferred by the legislation might be inconsistent with international law. British Prime Minister Boris Johnson said that the bill is designed to protect against irrational interpretations of the Northern Ireland Protocol. 

With the EU’s von der Leyen saying that she is “very concerned about the UK’s intentions to breach the Withdrawal Agreement – breaching the Withdrawal Agreement would break international law and undermine trust”, it looks like politicking is back at the forefront of Brexit negotiations – the negative impact on the UK economy could be enormous if negotiations turn scrappy.

Commenting on this development, "I will call for an extraordinary Joint Committee on the Withdrawal Agreement to be held as soon as possible so that our UK partners elaborate and respond to our strong concerns on the bill," European Commission Vice President Maros Sefcovic said, as reported by Reuters. Sefcovic further reiterated that they made it clear to the UK that the withdrawal deal was not open for renegotiation.

This article from Reuters is worth a read, quoting the Irish Deputy Prime Minister, who thinks Britain’s threat is “kamikaze”.
Reuters Article Link: “Kamikaze British threat to break laws”

In other news:

CAD: Interest rate meeting later today, no change in rates expected (0.25%), however, recent inflation weakness (despite a recovering job market and growth rebound) will worry the BoC, with a ‘lower for longer’ tone keeping pressure on the beleaguered CAD.

USD: Gaining ground as investors look for safe-havens, as Astra Zeneca paused its vaccine trial after one participant fell ill.

ZAR: A 50% contraction in the economy takes South Africa back to the same level of economic activity as 2007. This, in a country where the post-Covid unemployment rate stands at 30%, and many more are redundancies are on the horizon. South Africans endured one of the worlds longest and harshest lock-downs, and in the light of these economic figures, many will question the strategy in light of the long-term pain.