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UK Approves Covid Vaccine as Brexit Talks enter ‘Tunnel’ Phase

UK Approves Covid Vaccine as Brexit Talks enter ‘Tunnel’ Phase


UK housing data remained strong with Nationwide reporting an increase in house prices of 6.5% in the year to November, the strongest reading since January 2015. The final reading for the UK manufacturing index was revised to 55.6 from the flash reading of 55.2 and 53.7 in October.

Sterling was unable to make any headway ahead of the US session and lost ground amid a cautious tone surrounding the trade talks. A test of the 1.11 mark against the Euro and a push up towards the 1.3450 level against the Dollar saw Sterling struggle to gain support from a surge in robust risk appetite. 

Ahead of the European close there were reports that the Brexit trade talks had entered the “tunnel” phase of intensive talks, usually referring to talks being in its final phase. There was no official confirmation and there is usually a media blackout during a tunnel. 

News this morning the UK has approved the use of the Pfizer coronavirus vaccine, which will likely be rolled out from next week could see a pick up in the Pound should early all go well heading into the Christmas period. 



The US ISM manufacturing index retreated to 57.5 for November from 59.3 previously and slightly below consensus forecasts. The growth in new orders and production also slowed, the figures were still robust while prices continued to increase sharply. There was, however, a fresh contraction in employment after a gain last month.

In testimony to Congress, Fed Chair Powell stated that the central bank wanted to do as much as it can to get back to a strong economy. It would be premature to withdraw support for the economy and the Fed would not pre-emptively raise rates until we see actual inflation.



German labour market data beat expectations for the second successive month with a 39,000 unemployment decline for November. There was a small upward revision to the Euro-zone manufacturing PMI index to 53.8 from the flash reading of 53.6n whilst the CPI inflation rate held at -0.3% for November and slightly weaker than market expectations of -0.2%. The core rate was unchanged at 0.2% and in line with consensus forecasts. The data further fuelled expectations of additional ECB monetary easing at next week’s policy meeting.

The single currency held steady ahead of the US open with gains on the crosses and a sharp increase in Euro zone bond yields. The Euro pushed higher towards the European close with reports of positive Brexit talks helping to trigger a break above the 1.2000 level and gain further momentum to around the 1.2070 mark, the highest level since May 2018.

As of writing, the Euro currently trades at the 1.2065 level against its US counterpart. 


Data to watch

14:15 – USD – ADP Non-Farm Employment Change

16:00 – USD – Fed Chair Powell Testifies 

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