Sterling’s strength has been boosted this week by the Oxford/AstraZeneca vaccine news which found the vaccine stops 70% of people developing symptoms of the disease, however when people were given a half dose of the vaccine, followed by a full dose at least a month later the vaccines success rate was as high as 90%.
The Chancellor Rishi Sunak announced yesterday plans to borrow amounts not seen in British peacetime history. Britain will borrow almost £400 billion this financial year in order to pay for the massive hit to the economy caused by coronavirus, Sunak said on Wednesday.
At the same time, he announced updated growth forecasts for the UK economy, which was on course to shrink by 11.3% this year, the largest fall in output for more than 300 years. The Office for Budget Responsibility also expects unemployment to peak in the second quarter of next year at 7.5%, representing 2.6 million people.
Yesterday’s fall in sterling value came after the European Commission President Ursula von der Leyen warned that a Brexit deal is still far from certain. Von der Leyen said the disagreement over access to Britain's fishing waters continues to block progress, which, in turn, was a key factor that took its toll on GBP. During her speech to the European parliament on Wednesday, the European commission president, said the EU was willing to be “creative” to get a deal with the UK done, but admitted an agreement was in the balance with “very little time ahead of us”.
“We will do all in our power to reach an agreement.” she said. “But we are not ready to put into question the integrity of the single market, the main safeguard for European prosperity and wealth.”
Von der Leyen said legal texts on judicial and social security coordination, trade in goods and services and transport were almost finalised. “However, there’s still three issues that can make the difference between a deal and no deal,” she added.
Physical talks are on hold after a member of the EU negotiating team tested positive for coronavirus, but Barnier is expected to leave quarantine this evening and is due to head to London tomorrow for a last-ditch push for an agreement once he receives a negative coronavirus test.
Since negotiations began over a post Brexit UK/EU deal any news suggesting that a deal could be agreed has led to sterling strength, where no deal reports have had a negative impact on the currency. As the trade talks edge ever closer to their eventual end point it is important that you keep in touch with your account manager here as any news could have a significant impact on sterling exchange rates.
Economic activity in the eurozone sank once again in November after governments introduced new lockdowns and social restrictions to try and contain the further spread of Covid-19. The European Central Bank has warned in its latest financial stability review that European banks will not see profits return to pre-pandemic levels before 2022.
Lenders in the eurozone have struggled to make sizeable profits over the last decade following the 2008 global financial crisis, with stronger regulatory scrutiny and low interest rates. However, the recent coronavirus-induced crisis has worsened bottom lines further and that will continue to be felt over the coming months, according to the European Central Bank.
Key countries within the eurozone have been hit hard by a second wave of coronavirus and the subsequent lockdowns and restrictions, however it is important to note that the strength of the single currency is likely to be affected by the deal/no deal outcome of Brexit. A no deal scenario also poses a threat for the strength of the euro against a host of currencies.
The dollar rebounded from a three-month low against a basket of currencies on yesterday as a risk-on rally in global financial markets appeared to stall. The number of Americans filing first-time claims for jobless benefits increased further last week, suggesting that an explosion in new COVID-19 infections and business restrictions were boosting layoffs and undermining the labour market recovery.
Democratic allies close to the Biden campaign said former Federal Reserve Chair Janet Yellen is expected to be nominated as Treasury Secretary, which has increased expectations of large fiscal stimulus. She has called for increased government spending to lift the economy out of a coronavirus-induced recession. Yellen, who in 2014 made history as the first woman to lead the Fed, would also be the nation’s first woman to serve as Treasury Secretary.
“Yellen’s selection as Biden’s nominee for Treasury Secretary indicates an overall focus on economic recovery over regulatory policy and is a positive for markets and the economy as a whole,” Raymond James analyst Ed Mills wrote.
GDP data released yesterday by the US government estimated a growth rate of 33.1% in third quarter output. The report confirmed the US economy’s historic third-quarter expansion, however the economy retracted at a rate of 31.4% in the second quarter which was the deepest retraction since the government started keeping records in 1947.
As many US markets will be shut today to observe the Thanksgiving holiday, any major movements in dollar exchange rates are likely to be caused by external news and data.
All the staff I spoke with were helpful ,courteous and knowledgeable. The service is efficient and FCD make the exchange process hassle free.
Personal, attentive. What more can I say? First Rate.
Efficient, friendly, personable – I have used this service several times and will not hesitate to call on them the next time a foreign currency transfer is required.
Quick, competent and friendly: a reassuring excellence of service, which I heartily recommend to every potential client.