Pound advances as Brexit talks resume
Friday 23 October, 2020
Daily Currency UpdateGBP - British PoundThe UK and Europe are set to resume trade talks this week, just days after calling off negotiations due to a lack of progress. The U-turn follows comments from the European Union’s chief Brexit negotiator Michel Barnier who told the European parliament Wednesday morning that a deal was within reach. Michel Barnier also stated that both the UK and EU would need to work constructively and compromise to get a deal done prior to the 31st December deadline. The UK government followed by saying they are ready to welcome the EU team to London to resume negotiations. The news helped the Pound jump higher against both the USD and EUR. GBPUSD started the day below 1.3000, but shot to a session high of 1.3170 late afternoon. GBPEUR advanced from 1.0950 to 1.1094.Economic data from the UK remains thin on the ground today. Two speeches are expected from monetary policy committee member Haldane and bank of England governor Bailey this morning, but little is expected from either address. GBPUSD will likely be guided by the latest unemployment claims from the US, due for release at 1:30pm. Pound volatility will most likely be driven by Brexit headlines however, as we have seen in the past 24 hours.
Key MoversUS President Donald Trump accused Democrats on Wednesday of being unwilling to compromise on the latest stimulus package. Aid talks had recently resumed and were working well ahead of yesterday, but now it remains unclear whether the negotiations would continue ahead of the US presidential elections on November 3rd. Even if both sides were to reach an agreement prior to this date, the package still needs to run through the Senate which isn’t likely to be a smooth process.This has seen the USD gain back some of its recent losses against a number of currencies. As the aid package now looks like it will take longer than expected and with the growing COVID-19 infection and death rates globally, investors are starting to look into safe haven options like Gold and the US dollar. The AUDUSD had fallen back below 0.7100 overnight and EURUSD had dropped back below 1.1850.
- GBP/USD: 1.3030 - 1.3190 ▲
- GBP/EUR: 1.1010 - 1.1090 ▲
- GBP/AUD: 1.8380 - 1.8520 ▲
- GBP/CAD: 1.7120 - 1.7310 ▲