03/12/2020

Brexit anxieties weigh on sterling


GBP

Sterling fell to one month lows against the Euro and fell against the US dollar as doubts remain as to whether a post Brexit trade deal can be achieved. Differences remain between the U.K. and EU on the main sticking points which consist of fisheries, state aid and fair competition. Brexit uncertainty overshadowed positive news in regards to Britain becoming the first country in the world to approve the Pfizer-BioNTech COVID-19 vaccine.

Michel Barnier told ambassadors that Brexit talks would be thrust into crisis if a UK legislation expected next week includes clauses that would breach the existing withdrawal agreement.

Furthermore Irish foreign minister also echoed these thoughts and warned if the U.K. did deliberately breach the Brexit divorce accord, it will signal that the U.K. does not want a trade deal with the EU.

EU member states have warned Barnier not to be pushed into agreeing a deal which wouldn’t benefit the EU and would be deemed as unsatisfactory with the deadline looming fast. Sterling is likely to face more volatility as Brexit uncertainty continues to weigh on the currency. Lastly developments over the vaccine which will be available to use next week in the U.K. has been overshadowed by Brexit talks stalling

Key Announcements

USD – 1:30 – Unemployment claims – Forecast at 775k from a previous 778k
USD – 3:00 – ISM services PMI – Forecast at 56 from a previous 56.6


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