Currency News: British Pound Jumps Ahead of Brexit Talks

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The British pound inched modestly higher against the dollar on Monday. The currency showed signs of recovery ahead of the launch of formal Brexit talks between the UK and European Union. The exchange rose by 0.2% to $1.2801 per USD on Monday, up from $1.2778 late Friday EST. The move came in anticipation of the first day of discussions over Britain’s exit from the EU. Upon renegotiating trade terms, Britain and EU agreed a smooth transition for Britain to leave EU’s single market and customs union.  

The pound has fallen over 15% since the referendum vote for Brexit about a year ago amid investors’ confusion and worries that political uncertainty will damage the economy. Eyes are on Brexit Secretary David Davis and EU’s chief negotiator Michael Barnier to see whether Britain will go for a hard or soft divorce from the EU. FXTM research analyst Lukman Otunuga expresses the possibility that a soft Brexit may have the ability of supporting the pound. However, the Brexit talks create a high risk situation for the pound. The currency is still vulnerable to further downside amid worries about political instability in Westminster following UK’s general election. Expect more currency headlines in the following days as negotiations are finalized.

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