The pound fell on Monday as the UK’s Finance Minister said the UK would not adhere to EU rules after Brexit. Businesses have previously warned of the added cost of border checks with the EU after the transition period, limiting access to European markets. The pound fell 0.1% against the dollar at one point and was flat against the euro.
Analysts are now looking ahead to Friday’s PMI numbers which are the last set of data results before the bank of England will meet to decide on interest rates. The probability currently sits around 65% according to some analysts. Traders are not expecting large downside for the pound as the likelihood of a rate cut has already been priced in.
GBPUSD opened at 1.2976 and fell to a morning low of 1.2969. An afternoon recovery saw the pair finish higher at 1.2996
GBPEUR opened at 1.1695 and after a flat morning rose in the afternoon to close at 1.1725
The dollar rose to its strongest level of 2020 on Monday after last week’s data releases showed strength in the US economy. Other global currencies were largely quiet with FX volatility near all-time lows. The US economy has outperformed the eurozone and the China, but the latter are indicating signs of recovery. The European Central Bank has struck an optimistic tone in December in terms of economic outlook.
The dollar index gained 0.1% against a basket of currencies and the euro was down 0.1%. China released data on Friday showing the slowest annual growth rate for 30%
EURUSD opened at 1.1095 and fell steadily across the day to close at 1.1085