Currency Note

Pound strong during “crucial” week for Brexit

By Christopher Nye December 1st, 2020

The pound is strong against the euro and the dollar this morning as hopes for a Brexit deal remain. British Environment Secretary George Eustice said yesterday that this week is “crucial” for securing a breakthrough in talks.

The dollar is weak after news that biotech firm Moderna is filing for US and European approval of its COVID-19 vaccine before it is recommended for widespread use.

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GBP: Merkel urges negotiators on for “last step”

The pound strengthened against the euro and the dollar yesterday and is still strong this morning. This comes after German Chancellor, Angela Merkel, commented on Brexit trade negotiations and urged negotiators to “put all of our efforts into the last step”. She also said that some EU members are getting “a little impatient”.

There are still hopes that a trade deal can be secured before the 31 December deadline, despite sticking points needing to be resolved.

Bank of England official, Silvia Teneryo, said yesterday that a significant economic boost is only likely after the COVID-19 vaccine has been rolled out nationwide. She also reiterated her view that cutting interest rates could help the UK economy.

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EUR: Eurozone inflation figures due today

The euro is strong against the dollar on rising hopes for a vaccine and for a monetary stimulus package for the US. The euro is weaker against the pound, however.

Preliminary estimates for inflation rate in Germany were released yesterday, showing that consumer prices are expected to decrease 0.3% from a year earlier in November 2020, the largest decline since January 2015.

Today, manufacturing PMI data will be released for the Eurozone, as well as inflation rate figures.

USD: Moderna vaccine news weakens dollar

The dollar is still weak this morning due to positive vaccine news and expectations for more monetary stimulus to help the US economy.

Moderna, a company that has produced one of the COVID-19 vaccines, requested clearance for its vaccine in the US and Europe yesterday after late-stage trial results showed the vaccine was highly effective in preventing Covid-19, with no serious safety problems.

Federal Reserve Chair, Jerome Powell will testify in front of Congress today and tomorrow. As Congress have been unsuccessful in agreeing on a stimulus package, it’s thought that the Fed will announce more stimulus measures during their December meeting.

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