It’s been a strong start to the week for the pound after a number of factors have helped push the currency higher.
As is often the case after a short-term spike, sterling exchange rates tailed off towards the end of the day but there could be further to climb if the sentiment surrounding the currency continues to improve. The announcement from pharmaceutical company Pfizer on Monday regarding a successful vaccination candidate has provided global stockmarket’s with a substantial spike and the pound has also benefitted from the news. This is perhaps due to the UK being heavily impacted by lockdown measures due to the nations services based industry, so if the vaccination is successful and there is a return to normalcy for the UK economy, there could be an economic recovery in the not too distant future. The UK government has requested that the NHS is prepared for the vaccination process by December.
Yesterday the Pound saw further gains on hopes that a Brexit deal between the UK and the EU is imminent. Next Monday is the current informal deadline and this week Michel Barnier, the head of Brexit negotiations for the EU has been in the UK to try and thrash out a deal in the last stages of the negotiating process. Rumours are that the UK is now willing to budge on the EU access to UK fisheries matter which has been ongoing throughout the entire process.
UK Prime Minister, Boris Johnson was also defeated heavily in parliaments upper chamber on Monday evening regarding his internal market bill, which would’ve allowed him to breach Britain’s EU exit treaty. The UK had come under criticism for putting forward this bill, so the news of it being opposed could also have provided the pound with a boost.
You could argue that the gains for GBP exchange rates could have been greater if not for concerns surrounding the frosty relationship between Joe Biden, the President Elect of the United States and UK PM Boris Johnson. There are some concerns that Biden will not be forthcoming with a deal for the UK as he is pro EU. He has also personally criticised the UK for potentially disrupting the Good Friday Agreement which pertains to the Northern Irish border, and as he’s of Irish ancestry this could be a sensitive topic for him hence his prior comments.
This week, any updates surrounding the outcome of Brexit talks could continue to impact sterling exchange rates, and those of our readers with a GBP based currency requirement should be ready for Monday the 16th which could be a busy time for GBP exchange rates. Tomorrow will also see the release of GDP data for the 3rd quarter which could also impact the markets.
The US dollar has remained relatively flat considering the outcome of the US election remained uncertain throughout last week until Joe Biden was confirmed the victor by multiple media outlets at the weekend.
The Trump administration contests the declared outcome citing voting irregularities and voter fraud although little to no examples have been given so far. The US justice department has given federal prosecutors the go-ahead to investigate the alleged voting issues and with final results from Georgia, Arizona, North Carolina and Alaska still outstanding.
Betting odds can be interesting to follow during times like these and interestingly Betfair had President Trump’s odds at 27-1 on Monday, whereas yesterday they were 9-1, so there is still some uncertainty surrounding the outcome of the US presidential election despite many media outlets having already declared Biden the winner of the election.
Brexit talks also have the potential to impact EUR exchange rates, even if not to the extent of the pound but at the moment the rising number of Covid-19 infections and the detrimental affects further lockdown measures could have on the Eurozone economy are a concern for EU bulls (those hoping the currency gets stronger). There could be a double dip recession announced in the 4th quarter of the years economic output readings as fears build surrounding Germany’s economy which is the largest within the region.
Later today there will be speeches from several ECB members including ECB president Christine Lagarde, so this is also worth being aware of if you have a Euro based currency requirement to make shortly.
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