A trade deal for Christmas?
The British pound strengthened 0.4% to $1.3546 in Asian hours after surging 0.9% in the previous session to snap a three-day losing streak.
While there has been no official confirmation from either side that the months of negotiations had reached a conclusion, a senior British government source said Prime Minister Boris Johnson was poised to do a trade deal with the EU, after media reports said the agreement had already been done.
A source at the EU’s executive Commission said talks were still under way, and another British government source was also cautious, saying negotiations were ongoing.
The dollar was on the back foot in holiday-thinned trading as hopes for an agreement that would protect some $1 trillion in annual cross-channel trade from tariffs and quotas sapped demand for the safest assets.
The dollar index was at 90.233 following Wednesday’s 0.3% slide. The dollar index has lost more than 6% this year as investors bet the U.S. Federal Reserve will keep its monetary policy ultra-accommodative and fiscal stimulus will speed an economic recovery in 2021. Expectations for further declines by the dollar are helping buoy stock markets and emerging-market currencies.
The announcement of a trade deal could encounter a delay as the EU’s chief Brexit negotiator Michel Barnier and his UK counterpart were reportedly still speaking on fisheries. Moreover, there is a final expected call between Britain Prime Minister Boris Johnson and EU Chief Ursula von der Leyen.
This, in turn, leaves the EUR/GBP cross as the mercy of developments surrounding the Brexit saga, which might continue to infuse some volatility and assist investors to grab some short-term trading opportunities.