IFX Market Report: Wednesday 25th November 2020

Mid-way through the week, markets remain optimistic about the UK and EU agreeing on a last-minute Brexit deal. In contrast to the markets sentiment on the matter, European Commission President Ursula von der Leyen has noted that despite there being “genuine progress” made between the two sides, “there are still three issues that can make the difference between deal and no deal”, and she could not say “if, in the end, there will be deal”. Von der Leyen went on to add that “the crucial topics for the European side are, of course, questions linked to the level playing field, governance and fisheries.”

GBPUSD opened yesterday still way above the 1.33 handle, starting Tuesday off at 1.3372. At 12:00 however, we saw a sell-off in the Pound due to Brexit jitters but the pair was able to quickly retrace most of its losses, manging to stay in the 1.33 range. Cable finally closed the session at 1.3349.

GBPEUR managed to maintain its status in the 1.12’s. The pair opened at 1.1258 and traded the day within a 30 pip range, finally closing at 1.1242.

EURUSD had somewhat of a quiet day yesterday, opening at 1.1877 and closing subtly at 1.1874. This morning however has seen the pair surge beyond 1.19 due to a weakening U.S. Dollar. As the market becomes more favourable to risk-on currencies, the safe-heaven greenback has seen less demand. This move has been stimulated by the start of President-elect Joe Biden’s transition. The lower political uncertainty and the potential nomination of former Fed Chair Janet Yellen as Treasury Secretary has also been viewed positively by the markets. It is worth noting that despite the pairs early morning surge, it has not been able to sustain a position above 1.19, and is now fluttering between 1.1890 and 1.1900 (10:18 GMT)

On the data front, we have a plethora of notable events and economic data releases. At 09:30 we have the ECB Financial Stability Review, closely followed by the UK’s 2020 Spending Review, due to start at 12:30. Rishi Sunak will detail the government’s spending plans, which is expected to include an extra £3bn for the NHS, and increase in defence spending, and a £4.6bn package to help the unemployment crisis. Then in the afternoon, US economic data takes centre stage from 13:30 till the FOMC Minutes at 19:00.

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