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The pound has weakened against both the euro and the dollar this morning, as reports have surfaced that at the EU summit tomorrow, EU leaders will say that the progress of Brexit talks is “not sufficient” for a deal. This increases worries of a no-deal Brexit, causing sterling to weaken.
We could see further volatility from the pound today and for the rest of the week as it responds to headlines before, during and after the summit.
The dollar is stronger across the board this morning, benefitting from its safe-haven status due to stimulus and vaccine news.
Ahead of the EU summit tomorrow, make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Trader on 020 7898 0500 to get started.
GBP: Pound volatile ahead of EU summit
The pound is weaker against the euro and the dollar today, due to heightened volatility ahead of the EU summit tomorrow. It’s been reported that EU leaders will label progress in Brexit talks as “not sufficient” for a deal.
Boris Johnson, European Commission President Ursula von der Leyen and European Council President Charles Michel are to hold conference call on Brexit today to try to make some progress on ahead of the EU summit. Boris Johnson declared previously that he could walk away from negotiations if a deal doesn’t look likely by the 15th.
This week, Bank of England official, Jonathan Haskel, said that the Bank have an “absolutely open mind” about the possibility of sub-zero rates as part of its support for Britain’s economy during the coronavirus crisis.
EUR: Poor economic sentiment in Germany and Euro Area
Economic sentiment figures were released yesterday for both Germany and the Euro Area. Economic sentiment for Germany dropped by 21.3 points from the previous month to 56.1 in October, well below market expectations of 73. Investors voiced concerns about the recent sharp rise in the number of COVID-19 cases and the prospect of the UK leaving the EU without a trade deal.
It was a similar story for the Euro Area, which dropped to its lowest level since May, due to an expectation for a deterioration in economic activity.
Today, industrial production figures will be released for the Euro Area. There will also be speeches from President of the ECB, Christine Lagarde and Chief Economist, Philip Lane.
USD: Dollar strong due to paused vaccine trials
The dollar is stronger this morning, benefitting from its status as a safe-haven currency. This comes as Eli Lilly put its coronavirus antibody test on hold due to safety concerns, after Johnson & Johnson paused its COVID-19 vaccine trial yesterday because of a participant’s unexplained illness.
After contracting coronavirus, President Trump is now back on the campaign trail. Opinion polls suggests Mr Biden has a 10-point lead over Mr Trump. However, his lead in some key states is narrower.
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