As a deadlock on trade between the UK and EU looks increasingly likely, the Pound has taken a sharp downward turn as it reverses the gains it had made against its peers early in the week. Sterling had gone from strength to strength as the week started, off the back of the news that a Pfizer COVID-19 vaccine was 90% effective and ready to go into circulation before the end of the year. As Brexit negotiations appear to have stalled, two key members of the government, Lee Cain, director of communications, and most notably Dominic Cummings, Johnsons most senior advisor and architect of the Vote Leave campaign, will be leaving their positions.
Despite the rumours, Mr Cummings made it clear to the BBC that “rumours of me threaten to resign are invented”. The senior advisor noted that his “position hasn’t changed since my January blog” where Cummings states that he wanted to step back from his position, making himself “much less important – and within a year largely redundant”.
GBPUSD continued to depreciate on Thursday as it fell even further away from its 9-week high it reached only a few days ago. The pair opened shaky at 1.3182 yesterday and continued to depreciate through the session, before finally closing off at 1.3140.
As Brexit pressures weigh heavy on the Pound, GBPEUR also declined yesterday. The pair opened the trading day at 1.1182 and was unable to sustain itself at that level, closing off the day 1.1123.
Brexit negotiations are set to continue after insufficient progress was made between the to two sides this week in London, thereby passing the mid-November deadline. It has been reported that talks will continue today, pause over the weekend, and then resume in Brussels next week. The next informal deadline suggested by EU officials is the videoconference of EU leaders next Thursday. If a deal is not reached by then, Brussels will put forward a contingency legislation it prepared to prevent a cliff-edge scenario in the event of a no-deal. Many EU officials say that stretching the deadline even further makes ratification for Brussels before the end of 2020 almost impossible. One EU diplomate has asserted that “EU countries need time to scrutinize the text… the role of the EU member states is more than just endorsing the deal. If that’s what the European Commission has in mind, it will be disastrous. This is a delicate and fragile process, which the U.K. doesn’t seem to understand.”
Despite growing fears on Brexit, the single currency was able to make some ground on the U.S. Dollar yesterday, with EURUSD able to close above the 1.18 handle. The pair opened Thursday subtly at 1.1789 but closed strong at 1.1813.
