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Brexit talks take a turn

Daily Currency Update

GBP - British PoundSterling performed very well again on Wednesday as rumours suggested a trade deal will be done as early as next week. GBPUSD knocked through the 1.33 handle as traders continue to price a deal into the market. This however was short lived, as the EU have been asked to publish a No Deal Brexit plan, as businesses cannot continue to be left in the dark, in case there isn’t a deal in place. It has been reported that the majority of the deal has been agreed upon, however officials were yet to agree on state aid and fisheries. GBPUSD is now trading around the 1.32 handle, meaning yesterday’s gains have been eroded. In other news, KPMG have stated that they estimate 10.1% economic growth in 2021, after an 11.2% slump this year. Should there be no deal agreed, this may crash down to 4.4%, leaving the UK far behind pre-covid levels.

Key Movers

Christine Lagarde spoke on Thursday morning, where she again indicated the bank will act on Dec 10th. We can expect an expansion of the Pandemic Emergency Purchase Programme (PEPP). This is where they buy private and public bonds. The EU have already purchased EUR1.35 billion worth under the plan. They are also expected to expand their TLTRO programme (Targeted Long Term Refinancing Operations) which are cheap loans to banks. A rate cut is less likely in conjunction with these plans, meaning a small rise in the euro may be imminent. The US sees the release of the Philadelphia Manufacturer Index and Unemployment claims.

Expected Ranges

  • GBP/USD: 1.3105 - 1.3310 ▼
  • GBP/EUR: 1.1095 - 1.1320 ▼
  • GBP/AUD: 1.8060 - 1.8290 ▲
  • GBP/CAD: 1.7275 - 1.7410 ▲