Brexit Optimism Resumes
Sterling finished the week higher on Friday benefitting from rising Brexit optimism as investors took comfort in reports that a Brexit deal is 95% done.
The reports were particularly reassuring for investors as they cited leaked notes from Fridays EU Brexit brief headed by European Commission Secretary Generale Ilze. Ilze, who was standing in for EU Chief Negotiator Michel Barnier who went into self isolation on Thursday reportedly told the meeting that a trade deal was “finalised” in almost all areas covering all “subjects” and was effectively 95% done. Ilze did acknowledge that some remaining obstacles are at bay, however, Ilze told the meeting that there was a “commitment to find workable solutions” to get a deal done and ratified.
In addition to the leaked notes, both sides gave equally optimistic tones when discussing the state of talks. EU Commission President Ursula Von Der Leyen, stated that “after difficult weeks with very, very slow progress we have now seen better progress, good progress on the important files”. With a spokesperson for the UK Prime Minister reiterating the desire for the U.K. and EU to strike a trade deal.
Expectations that a deal is set to be secured has kept the pound supported over recent weeks and remains the favoured outlook. However, should talks fail to yield progress this week and the key outstanding issues remain as we head into the final month of the year, it’s likely no deal fears will start to weigh on the British currency once again.
There was also more positive news from a UK perspective on a Covid-19 vaccine. The Oxford University Coronavirus vaccine developed by Astrazeneca has reportedly shown its 90% effective against the virus and prevented 70% of people from contracting the virus studies found. This is positive news for the UK who have already ordered 100 million doses of the vaccine with 4 million doses expected to be ready before the end of the year.
08:30 – EUR – Markit Manufacturing PMI (Ger) beat expectations to read 57.9
09:00 – EUR Markit PMI composite (NOV) (prel) expected to fall to 45.8 from 50
09:30 – GBP – GBP Markit Manufacturing PMI (Nov) expected to fall to 50.5 from 53.7
09:30 – GBP – GBP Markit Services PMI (Nov) expected to fall to 42.5 from 51.4
15:30 – GBP – BoE Monetary Policy Report Hearings
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