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Sterling Edging Higher On Trade & Vaccine Rhetoric

Sterling Edging Higher On Trade & Vaccine Rhetoric

GBP

On Friday, the 27 country ambassadors to the EU were briefed on the current standing of Brexit trade talks. According to the negotiating team, an agreement is said to be very close in most areas, although the areas of a level playing field, fisheries and governance still having differences. EU Commission President von der Leyen was broadly optimistic in her comments, although reiterated that there was still a lot of work to do.

Sterling remained firm given speculation over a deal within the next few days, although moves remained relatively limited. 

There was also news of an agreed trade deal between the UK and Canada, although this was effectively just a transitional roll-over of the existing deal with the EU and there were still expectations that a UK/EU deal would be secured. Sterling sentiment was underpinned by reports that the Pfizer coronavirus vaccine could be approved in the UK this week, although Astra-Zeneca trial results were mixed with trade rhetoric still proving crucial.

 

USD

Chicago Fed President Evans stated that the Treasury decision to stop some Fed measures from year-end was disappointing. As far as the economy is concerned, he suggested that the Fed was in a good place and could wait to see how things played out. The comments dampened speculation that the central bank could take further action at the December meeting, although there was still some speculation that there would be a move to increase bond purchases.

A subdued US dollar price action – amid conflicting signals about the US COVID-19 relief package – remained supportive of the pair’s intraday uptick. Reports indicated that US Senate Republican and Democrat leaders have agreed to resume negotiations on coronavirus stimulus measures. The positive development, to a larger extent, was offset by the US Treasury Secretary Steven Mnuchin’s decision to end some of the pandemic relief lending for struggling businesses under the CARES Act.

EUR

The Euro made further gains on Friday but was unable to challenge the 1.1900 level against the Dollar amid reservations surrounding the Euro-zone outlook. Another failure in breaking the key level triggered a fresh correction lower with the November Euro-zone consumer confidence index also weakening to -17.6 from -15.5 previously.

ECB chief economist Lane warned that current restrictions would lead to a drop in economic activity, but the impact would be less severe than in Spring.

On the docket, the Euro-zone PMI business confidence data will be watched closely today with expectations of further significant weakness in the services sector and a monthly manufacturing slowdown. 

As of writing, the Euro currently trades around the 1.1865 mark against its US counterpart. 

 

Data To Watch 

08:15 – EUR – French Flash Services PMI

08:15 – EUR – French Flash Manufacturing PMI 

08:30 – EUR German Flash Manufacturing PMI

08:30 – EUR – German Flash Services PMI

09:00 – EUR – Flash Manufacturing PMI

09:00 – EUR – Flash Services PMI 

09:30 – GBP – Flash Manufacturing PMI

09:30 – GBP – Flash Services PMI

14:45 – USD – Flash Manufacturing PMI

15:30 – GBP – Monetary Policy Report Hearings

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