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Fri 19 Jul 2024 12:41GMT

Pound (GBP) Struggles as Doubts Continue to Grow Over Brexit

Published: 30 Nov 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) struggled today as UK-EU trade talks are set to continue amidst rising concerns that the two sides could fail to come to a consensus on a post-Brexit trade agreement.

Last week saw the EU’s Chief Negotiator, Michel Barnier, express doubts over whether the two sides could secure a trade deal by the end of the year.

As a result, demand for Sterling has begun to slip as the UK faces high levels of economic uncertainty, with Brexit and Covid-19 threatening to severely weaken the economy in 2021.

Meanwhile, UK mortgage demand beat forecasts and rose to its highest levels in 13-years despite the Covid-19 crisis.

Euro (EUR)

The Euro (EUR) struggled today as Germany, the Eurozone’s largest economy, continues to struggle with the Covid-19 crisis.

German Chancellor Angela Merkel warned that the nation ‘still need to make efforts’ as the ‘number of daily infections is still at a much too high level’.

In Eurozone economic news, today saw the release of the flash German inflation data for November, which fell by -0.7% year-on-year.

Germany’s Federal Statistics Office commented:

‘The inflation rate is influenced, among other things, by the reduction in value-added tax that came into force on July 1, 2020.’

US Dollar (USD)

The US Dollar (USD) continued to suffer this week as investors are becoming increasingly concerned over the health of the American economy as a third-wave of Covid-19 threatens to sweep through the nation.

As a result, traders are seeking out other currencies, such as the US Dollar’s peer, the Euro, instead.

Meanwhile, optimism over rollout of a coronavirus vaccine has also weakened demand for the safe-haven ‘Greenback’.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) performed relatively well today despite sliding oil prices ahead of the OPEC meeting.

However, following last week’s strong performance of WTI crude on growing confidence in a Covid-19 vaccine, demand for the commodity-correlated ‘Loonie’ has steadily risen.

Ian Nieboer, the head of research at Enverus, however, warned:

‘Oil at $45 takes you out of the ICU. But there is still a ways to go before you declare shale healthy again. That’s why Opec is so important.’

Australian Dollar (AUD)

The Australian Dollar (AUD) has been plagued by a growing feud between Australia and China, after an official Chinese Twitter account shared a ‘fake image’ of Australia’s alleged war crimes in Afghanistan.

As a result, demand for the ‘Aussie’ has slipped as China is Australia’s largest trading partner. Therefore, the outlook for Australia’s economy looks increasingly uncertain.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) edged higher today following strong Chinese PMI data.

With China being New Zealand’s largest trading partner, this has buoyed confidence in New Zealand’s economy.

As of Monday, 30th November 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1174, GBP USD exchange rate was 1.3339, GBP AUD exchange rate was 1.8125, GBP NZD exchange rate was 1.8995, GBP CAD exchange rate was 1.7328, and GBP CNY exchange rate was 8.7759.
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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