As markets eagerly await news on Brexit, Monday proved to be largely uneventful despite another COVID-19 vaccine being announced by US biotechnology giant Moderna. Unlike when Pfizer announced their vaccine, volatility was somewhat limited in response to Moderna’s breakthrough, proving that health and economic challenges in the short-term are dictating performance. With 2020 soon coming to a close, COVID-19 cases are rising rapidly and are likely to damage the recovery in Q4 and Q1 next year.
GBPUSD started the week above the 1.32 handle opening Monday at 1.3220. After losing its grip on that mark in the late morning, in the afternoon the pair was able to retrace some of its losses and finally closed off the session at 1.3193.
Despite trading in a tight range yesterday, GBPEUR also closed below where it opened. The pair opened the day at 1.1146 and closed just below that level at 1.1140.
The Pounds sluggish performance is largely due to the unconstructive reports coming from Britain’s latest negotiations with the EU. Senior EU members have asserted that they are ready to take talks right down to the wire and intend on conjuring up a “creative solution” to avoid a No Deal. With the transition period set for 31st December, President of the European Commission Ursula von der Leyen has noted that she is more concerned with the “quality” of the deal rather than adhering to the “craziness” of deadlines. Further reports suggest that Lord Frost has told the PM that a trade deal could be secured by “early next week”, but talks could still collapse over fishing and red tape, with both sides urging the other to “get real”. Downing Street confirmed that while “key elements of the draft text are not agreed… the Government is united behind the negotiation position.” Despite both sides appearing very committed to agreeing on a deal, many EU officials believe that time is running out – with one senior member noting “it’s getting terribly late and may be too late already.”
Once again, with limited economic data of note being released today, we have a host of speeches from key central bankers. ECB President Lagarde will be speaking again today, following a speech from ECB member Guindos. BoE Governor Andrew Bailey will be speaking at 14:00, followed by Fed members Bostic, Daly and Williams.