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Johnson Travels to Brussels For Final Talks

Johnson Travels to Brussels For Final Talks

GBP

Halifax UK house prices rose by 1.2% in November with the annual increase at 7.6% from 7.5% previously and the strongest rate since August 2016. There was no significant reaction as political noise continued to dominate Sterling. EU/UK trade deal hopes dropped early on after a series of downbeat assessments and rhetoric from officials and given previous optimism over talks the Pound slid to lows of 1.3225 against the Dollar and the Euro strengthened sharply to 1.0941.Sterling gradually pared the losses after the UK offered to withdraw controversial Internal Market Clauses if there was a Brexit deal.

Boris Johnson will travel to Brussels this week to meet Ursula von-der Leyen to attempt to broker a deal, from which markets assume Johnson would have to return from Brussels with some form of agreement. 

Consumer spending for November recorded an annual decline of 1.9% according to Barclaycard, the surge in online grocery shopping offset by a slide in department store sales. Sterling has slipped again as the market opened to trade below 1.3350 against the Dollar with the Euro at 1.1013.

 

USD

The US employment index strengthened to 98.8 for November from 98.3 previously. There were, however, increased fears over the short-term US outlook, especially with a fresh surge in coronavirus cases. 

There was further speculation that expansive US fiscal and monetary policies would undermine the dollar, especially with stronger risk appetite and a recovery in the global economy. The US currency dipped sharply in New York which helped propel the Euro to highs near 1.2165.

 

EUR

German industrial production increased 3.2% for October following a 2.3% gain previously. The Eurozone Sentix investor confidence index improved to -2.7 for December from -10.0 previously and above consensus forecasts of -8.3 which demonstrated some resilience despite renewed lockdown measures. German Chancellor Merkel warned that additional measures would be needed after Christmas and the Euro initially lost ground with Brexit fears having a negative impact.

Caution lies ahead of Thursday’s ECB policy meeting with a strong expectation of further policy easing and the potential for stronger rhetoric against currency gains. The Euro retreated as the Dollar managed to regain some ground with the single currency falling to the 1.2120 area in choppy trading conditions. 

As of writing, the Euro currently trades just above the 1.21 mark against its US counterpart.

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