Currency Note

Pound stronger on reports of Brexit progress

By Carl Hasty December 16th, 2020

The pound has strengthened this morning after reports that the UK and the EU have made progress towards a trade deal. European Commission President, Ursula von der Leyen, said that progress has been made and that the next few days will be critical.

There will be a series of PMI data released today for the Eurozone, Germany and the UK. In the US, the Federal Reserve will conclude their latest monetary policy meeting later and the markets will be looking out for any key announcements or comments from officials.

As Brexit talks continue, we could see volatility for the pound over the coming days and weeks. Take this opportunity to 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: Optimism for a deal soon

The pound is stronger against the dollar and the euro this morning as there is talk that a Brexit trade deal may happen soon. There have been reports that progress has been made on the level playing field provisions, with both sides making concessions. However, fishing rights remains a prominent issue.

Inflation rate figures for the UK came in this morning, showing that consumer prices in the UK edged up 0.3 percent year-on-year in November, below 0.7% in October and market forecasts of 0.6%.

Later today, PMI data for the UK will be released, which measures how the services and manufacturing sectors have performed in December so far.

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EUR: PMI data for Germany and Eurozone today

The euro has been advancing towards yearly highs against the dollar due to vaccine hopes and Brexit optimism.

There will be a series of data releases today, including PMI data for both Germany and the Eurozone as a whole. The service sector is expected to stay in contraction territory due to ongoing restrictions due to the coronavirus pandemic. Germany enters a stricter lockdown today and restrictions will continue over Christmas.

The European Medicine Agency has brought forward its decision on the Pfizer/BioNTech vaccine to December 21 from the 29. They are expected to approve it to be rolled out in January.

USD: All eyes on Fed meeting

The dollar has continued to weaken this morning as hopes for a stimulus package from Congress increase. Support is growing for the bill, which has now been slimmed down in order to push it through.

The proposal was originally a $908 billion package, but this has now been split into two parts. It is hoped that the first part will be approved by the end of the week.

All eyes will be on the Federal Reserve today as they conclude their latest monetary policy meeting. The markets will be looking out for any changes to their bond buying programme, as well as any comments on the state of the US economy.

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