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The pound is falling sharply on Thursday amid increasing Brexit concerns following the UK internal market bill that according to Brussels violates the Withdrawal Agreement. The EUR/GBP jumped, breaking above 0.92 and according to analysts at Rabobank, is possible that the decisions taken by the UK PM Johnson’s government could risk a move towards last year’s highs in the 0.9325 area in the coming weeks.

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“Although movements in cable over the past couple of sessions have been buffeted by the volatility in EUR/USD, GBP/USD has today dropped back to level not seen since late July. Coincidentally, EUR/GBP has surged back above 0.92 (…) In our view, EUR/GBP tends to provide a clearer measure of Brexit related tensions than cable.”

“Bearing in mind that EUR strength has played a part in lifting this exchange rate in recent months, a failure of the UK government to step back from its intention to break international law threatens a move towards last year’s high in the 0.9325 area in the coming weeks.”

“Since there is so little time before the end of the transition period and given the UK government’s commitment to putting sovereignty at the forefront of its negotiations, scope for any agreements between the EU and the UK in trade would appear diminished. This suggest that GBP losses could extend further dependent on the outcome of the EU/UK trade talks.”