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Markets Rebound On Vaccine Breakthrough

Markets Rebound On Vaccine Breakthrough

GBP

BRC sales data recorded a 5.2% year-on-year increase for October with an element of stock building while Barclaycard recorded a 0.1% annual decline in consumer spending. UK unemployment jobless claims count declined 30,000 for October, but payrolls declined slightly for the month while unemployment increased to 4.8%

Markets continue to monitor trade talks closely with negotiations facing a critical week ahead. The main focus, however, was on global risk conditions and the positive vaccine news. Sterling drove up higher on the news with the UK currency strengthening to monthly highs above 1.3200 against the US dollar and over the 1.11 against the Euro.

Any move towards a vaccine should help underpin Sterling sentiment as underlying concerns continue to surround the UK economic outlook with medium-term financing pressures as coronavirus restrictions remain in place for the short term.

As expected, the House of Lords defeated the Internal Markets Bill and it will return to the House of Commons as the government has insisted that the controversial clauses will be reinstated. Sterling holds firm this morning trading over the 1.3200 against the Dollar and over 1.1150 against the Euro.

 

USD

Traders unloaded on safe havens and bought riskier currencies along with the Dollar as market confidence skyrocketed as progress on a COVID-19 vaccine was confirmed alongside the prospect of a Joe Biden presidency.

The moves came after Biden announced his first steps as president whilst Pfizer and its German partner BioNTech SE announced that their experimental COVID-19 vaccine was more than 90% effective in trials in what experts say could be a turning point toward halting the pandemic.

A Biden presidency is expected to shore up international trade through steady policies and the prospect of a successful coronavirus vaccine is seen as a major tailwind.

 

EUR

German exports increased 2.3% in the year to September from 2.9% previously and slightly above consensus forecasts. The Eurozone Sentix investor confidence index weakened slightly to -10.0 for November from -8.3 previously, although slightly better than consensus forecasts of -15.0.

Market conditions were initially quite subdued yesterday in early Europe, the mood however dramatically changed ahead of the US open as Pharmaceutical giant Pfizer announced that its vaccine candidate had achieved over 90% efficacy based on initial trial results and that no safety concerns had been found. Risk appetite surged on the announcement which initially undermined potential defensive Dollar demand.

The Euro pushed higher and peaked around the 1.1920 whilst commodity currencies also posted strong gains. The single currency was then subjected to a significant correction and declined sharply as US yields moved higher. 

As of writing, the Euro currently trades around the 1.1820 against its US counterpart. 

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