IFX Market Report: Monday 16th November 2020

As markets embark on a new week, the volatile Pound is up today against the U.S. Dollar, yet down against the Euro. Fears of a No-Deal Brexit plagued headlines over the weekend as negotiations between the two sides resume today in Brussels. Britain’s chief negotiator Lord David Frost reiterated that a deal might not be secured “as the Prime Minister made clear on 16 October… people and businesses must prepare for the change that is coming on 31 December, most of which happens whether there is a deal or not.”

After losing its grip on the 1.32 handle last week, GBPUSD was able to claw back some of its losses as Friday came to a close. Cable started the day at 1.3157 and finished the session above that mark at 1.3174.

As Brexit negotiations go down to wire with either side unable to come to an agreement yet, GBPEUR spent Friday bouncing between the 1.1100 and 1.1150 range, unable to push beyond or below those levels. The pair opened the session at 1.1138 and closed a fraction above that at 1.1142.

Over the weekend Lord Frost went on to argue that Britain “may not succeed” in securing a post-Brexit trade deal, but him and his team are “working to get a deal”, stressing that “the only one that’s possible is one that is compatible with our sovereignty and takes back control of our laws, our trade, and our waters.” Health Secretary Matt Hancock solidified the government’s stance when he claimed that Britain’s “red lines haven’t changed and we’re preparing for whatever the outcome is”. He went on to add that “of course our preference is to get a deal and that is open to the Europeans if they choose to make the progress that’s needed.”

Ireland’s Foreign Minister Simon Convey yesterday said the UK and EU are entering “move week”, claiming that both sides “have got to make big progress this week, hopefully we have got to get the big issues resolved in principle this week so then we can finalise text and get this deal ratified”. Despite asserting that an agreement between both sides is “very difficult” but “very doable”, Convey said that there is absolutely “no way” Brussels will agree on a trade deal if the government advances ahead with its controversial Internal Market Bill.

EURUSD was able to keep itself above the 1.18 level going into the weekend, closing above where it opened on Friday. The pair started off the session at 1.1812 and closed above that mark, finishing the week at 1.1823.

In the absence of economic data releases, we have a host of speeches from central bankers – most notably ECB President Christine Lagarde at 13:00. From the ECB we also have members Guindos and Mersch speaking today. From the Bank of England, we have Haskel speaking at 17:30, and from the Fed, Clarida and Daly.

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