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Important Notice - Fraud awareness
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The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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GBPUSD prices remain lower as tensions increase over Brexit

GBPUSD has remained on a ranging market since Monday with more downward pressure coming in, up to the present moment. The pair failed to rise with other pairs yesterday when there was a strong US dollar pullback. The bulls are fearful over the outcome of the increasing tension on Brexit after the Labour Party leader of Northern Ireland disclosed what he called the "five strategies for Brexit to work."

The UK Brexit Minister, Lord David Frost, announced that the UK and EU will intensely discuss implementing the Northern Ireland protocol this week.

Currently, the significant resistance for GBPUSD is at $1.2150. Failure to sustain above the current range will push the price down to the next support at $1.2092.

How is the Brexit tension affecting the British Pounds today?

The increasing tension over Brexit is currently weighing on the British Pounds negatively. Thus, investors are now staying away from investment and awaiting the resolution of the current crisis. The tension heightened after the Northern Ireland government accused Britain of bridging the Brexit deal agreements on the Northern Ireland protocol. This accusation comes in following the new laws formulated by the British Parliament, which had altered the initial understanding of the Brexit deals.

According to the response from the British Parliament, it was necessary to prevent goods from flowing into EU member country Ireland from the British Province of Northern Ireland.

This bridge on the initial Brexit deals has further increased the political tensions between the EU and Northern Ireland.

Nevertheless, the current Brexit struggle is seriously affecting the economic activities in the country. For instance, according to the report from Reuters, "Farmers are continuing to suffer from labour shortages and wasted crops as seasonal workers struggle to get work with the new Brexit Visa."

This shortage of workers, according to the report, "has led to millions of pounds being lost as crops remain unpicked, in turn increasing food inflation up to 20 percent..."

The issuance of post-Brexit visas was impacting farm activities and the invasion of Ukraine, which has prevented more hired workers from coming to work in the UK.

Speaking on this, the Managing Director of Sandfield Farms told sky news that his company is facing a significant shortage of workers due to the current situation. In his words: "If we haven't got the people, we simply can't harvest the crop."

"We try to recruit locally, and they're just not the people out there."

Above all, the general sentiment for this forex pair is bearish.

Last Updated: 05/07/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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