The GBP/USD pair pared earlier losses as traders reacted to the new developments on Brexit. It also reacted to the overall weaker US dollar and the relatively strong UK manufacturing PMI data. It is trading at 1.2957, which is lower than the intraday low of 1.2817.
European Union sues the United Kingdom
The European Union launched a legal action against the United Kingdom in protest to the Internal Market Bill. The EU had given the UK until yesterday to remove parts of the bill that break international law.
The internal market bill is part of Boris Johnson’s administration to streamline trade relations between England, Wales, and Northern Ireland. Notably, the bill would go against parts of the bill that the EU and the UK negotiated last year. Johnson’s government has said that the bill is important to mitigate the implications of a no-deal Brexit.
The legal action by the EU comes at a delicate time. In Brussels, teams from the two sides are meeting to deliberate on key issues like trade and fisheries. If there are still significant differences when the talks end tomorrow, it will increase the possibility of a no-deal Brexit. On the other hand, if they reach some agreements, they will start more in-depth negotiations before the unofficial deadline of October 15th.
Still, according to Sebastian Payne, a Financial Times reporter, officials in London believe that the two sides will reach an agreement. He said:
Despite the EU launching legal proceedings against the UK over the internal market bill, officials in London are increasingly optimistic a Brexit deal.
“We’ve gone from about 30% chance of a deal
