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Sterling falls 1% as Brexit uncertainty returns

Sterling falls 1% as Brexit uncertainty returns

Pound sterling fell more than one percent against both the US dollar and the euro on Tuesday's trading session, as uncertainty over Brexit returned.

The losses in the value of the British currency came after a recent report mentioning that the British government intentions to make the issue of extending the transition period after the Brexit is illegal.

As of 10:03 GMT, the pound slumped against the U.S dollar by one percent at 1.3198. Against the euro, it also slipped by same percentage to reach 1.1840 after opening at 1.1833.

The BBC and other local media reports revealed that Prime Minister Boris Johnson would add a review of the Brexit bill, officially known as the Withdrawal Agreement Bill.

The review would rule out any extension of a transition period after December 2020, and is one of Johnson's attempts to speed up the process of leaving the EU.

The transition period is important as it represents the period during which the EU and the Kingdom can negotiate a trade deal.

During the transition period, EU laws remain applicable to the United Kingdom as if it were a member state of the bloc, but it is no longer represented in EU decision-making bodies.

At present, there is an option to extend the transitional period for up to two years once the parties agree, as the United Kingdom is due to leave the EU on 31 January 2020.

Regarding economic data from the U.K., it showed a stability at 3.8 percent in the quarter ended October, and the average earnings for the same period retreated from 3.7 percent to 3.2 percent.

The dollar index, which tracks the green currency’s movements versus a basket of major currencies, slipped to 96.94, compared to the session’s open price at 97.11. 

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