Currency Note

PM will travel to Brussels to secure Brexit deal

By Christopher Nye December 8th, 2020

After weakening against the euro and the dollar yesterday, the pound has recovered this morning on news that the Prime Minister will travel to Brussels this week in an attempt to secure a Brexit deal. He will meet with President of the European Commission, Ursula von der Leyen, after speaking with her on the phone yesterday.

The dollar is stronger this morning as COVID-19 infections continue to increase in the US, with more restrictions being introduced. The Eurozone awaits economic sentiment figures today, which will reveal expectations for Europe’s economy over the next 6 months.

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GBP: Pound stronger on news of Boris travelling to Brussels

Sterling weakened yesterday on worries over Brexit trade talks between the UK and the EU. With the December 31 deadline fast approaching and the European Council meeting this week, there are concerns over whether a deal can be agreed soon. Reports that the EU’s Chief Negotiator is “rather downbeat” about the progress of negotiations didn’t help the pound.

However, this morning the pound has recovered on news that Prime Minister Boris Johnson will travel to Brussels this week for a face-to-face meeting with President of the European Commission, Ursula von der Leyen. This came after the two of them had a phone call yesterday to discuss key issues. The day of the meeting hasn’t been confirmed yet.

The Pfizer/BioNTech vaccine has started to be administered in the UK today. The first of 800,000 doses was administered at 6:30 this morning.

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EUR: Economic sentiment figures due today

The euro recovered against the dollar yesterday after starting the day in a weaker position.

GDP and Economic Sentiment figures are due to be released for the Eurozone today. Economic Sentiment for Germany is expected to show an increase, possibly due to positive vaccine developments which should curb the spread of the coronavirus pandemic. The Economic Sentiment Index measures the level of optimism about the expected economic developments over the next 6 months.

At the EU summit this week, member states will discuss the EU’s recovery fund, with Hungary and Poland still threatening to veto it. This could delay access to these urgent funds in January.

USD: Congress to vote on stimulus this week

The dollar strengthened this morning as rising COVID-19 cases and increased restrictions in the US are balanced with vaccine hopes and the promise of a stimulus package to help the US economy.

Congress is expected to vote on the legislation for a new stimulus package this week. This is expected to pass, which will give the lawmakers more time to negotiate a deal. Around $908 billion of funding is already on the table.

President elect, Joe Biden, continues to choose his cabinet, recently appointing retired General Lloyd Austin as his defence secretary.

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