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Brexit talks delayed by Coronavirus.

GBP - British Pound

Brexit talks have been forced to conclude for the week, with an EU negotiator testing positive for Coronavirus. This is certainly not ideal, considering the deadline is rapidly approaching. The general criticism from the EU side seems to involve the lack of time left before the 31st December deadline to complete the deal. With the majority complete, there are still the fine details to agree upon, including the elusive sticking points on fisheries and state aid.

The pound took a brief knock on the back of the news, however, has once again settled, leaving GBPUSD trading above the 1.3250 handle.

The pound was gifted a boost, as October’s retail sales figure came in much better than expected. The actual reading came in 1.5% better than the -0.3% forecast, suggesting UK based consumers are shopping online, which is a great and unexpected boost for the economy, and the pound.

In other news, Boris Johnson is faced with potentially losing another cabinet member, as it has been reported that Priti Patel has breached the ministerial code. Johnson now must decide if firing Patel is the right option, with so much on his plate before the end of the year. Expect sharp, erratic spikes in currency if the news does break, as traders try and find clarity in the chaos.

Key Movers

The US saw positive manufacturing data on Thursday, the sixth straight since the nosedive in March/April, as the Philadelphia Manufacturing Index came in at 26.2, better than the expected 22.0. Another month of expansion suggests the US, like the rest of the world are heading in the right direction with regards to Coronavirus, but still have a long way to go to reach pre-Covid levels. In terms of the Presidential race, it is looking more and more likely that Trump’s argument is fabricated, as Biden wins Georgia’s recount by over 12,000 votes. The clarity will likely stabilise the US Dollar, for now.

In Europe, Chancellor Angela Merkel is the most recent to face criticism on her Coronavirus management. With cases in Germany rising, many are calling for their lockdown measures to be tightened, or at least continued. The Euro will not take kindly to a further drop in German manufacturing. Christine Lagarde, head of the ECB, is scheduled to talk on Friday, for the 5th time this week. It seems she is on a media blitz before the ECB’s December 10th policy meet, in which action is expected to be taken, in order to ease the covid recovery. The Eurozone will spend EUR9bn on vaccines from Pfizer and CureVac.

Expected Ranges

GBP/USD: 1.3185-1.3360 ▲

GBP/EUR: 1.1105-1.1280 ▲

GBP/AUD: 1.8110-1.8340 ▼

GBP/CAD: 1.7255-1.7470 ▲