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Pound (GBP) Steadies as Hopes Grow Over Brexit Deal

Published: 15 Dec at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

Pound (GBP)

The Pound (GBP) stabilised today as Brexit uncertainty has been tempered by the EU’s Chief Negotiator, Michel Barnier, who said that a Brexit deal could occur in just a matter of days.

This follows a significant concession from Prime Minister Boris Johnson on several key clauses which had previously impeded progress in UK-EU- talks.

As a result, GBP investors are now more hopeful that the two sides could compromise and agree on a post-Brexit trade agreement.

In UK economic data, today saw the release of the ILO unemployment rate report for October, which rose by 4.9%.

Nonetheless, with the UK rollout out Covid-19 vaccines, some analysts were more hopeful about the British economy going forward.

Euro (EUR)

The Euro (EUR) has benefited from news that the European Union could approve a Covid-19 vaccine rollout in a matter of days.

With Germany set to return to lockdown restrictions in January, this has renewed confidence in the Eurozone economy’s ability to recover in 2021.

However, Jörg Krämer, chief economist at Commerzbank, warned:

‘Germany must brace itself for a second recession. The additional closures affect, among other things, all stores except those for daily needs . . . hairdressers and largely schools and day care centres for children.’

US Dollar (USD)

The US Dollar’s (USD) gains have been compromised by rising optimism over a US stimulus package.

As a result, demand for the safe-haven ‘Greenback’ has suffered, along with Covid-19 vaccine rollouts in Europe buoying appetite for riskier assets.

Brexit optimism has also dragged on demand for the US Dollar.

In US economic news, today saw the release of November’s Industrial Production gauge, which beat forecasts and rose by 0.4%.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) has benefited from firming oil prices, with the commodity linked ‘Loonie’ edging higher as oil – Canada’s largest export – increases in value amid news of Covid-19 vaccine rollouts.

Amrita Sen, the co-founder of Energy Aspects Ltd, commented:

‘Oil is the cheapest of all reflation assets. With vaccines slowly rolling out, we expect investors to start returning to the oil sector and for prices to continue firming.’

Australian Dollar (NZD)

The Australian Dollar (AUD) dipped owning to a dovish statement from the Reserve Bank of Australia (RBA).

The RBA announced that it would extend its quantitative easing (QE) program by purchasing another A$100 billion from government assets.

Analysts at Bloomberg said:

‘The driving forces behind the extension – despite a more positive growth and risk backdrop – is other central banks expanding their balance sheets and the local currency heading toward 80 U.S. cents.’

The ‘Aussie’ is also benefiting from talks of US stimulus measures.

As a result, demand for riskier assets such as AUD has risen over the past few weeks.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) suffered from mixed Chinese data this morning, which weakened demand for the risk-sensitive ‘Kiwi’.

As of Tuesday, 15th December 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1062, GBP USD exchange rate was 1.3444, GBP AUD exchange rate was 1.7795, GBP NZD exchange rate was 1.8973, GBP CAD exchange rate was 1.7075, and GBP CNY exchange rate was 8.801.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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