Risk on sentiment boosts Sterling
Sterling rallied close to early September highs on Tuesday benefiting from market sentiment shifting to risk-on amid hopes of a COVID-19 vaccine and a Brexit deal edging closer.
The shift in market sentiment to risk-on follows the announcement from pharmaceutical company Pfizer that a vaccine that is 90% effective could soon be available. Commenting on the vaccine development, The British Health Secretary Matt Hancock provided further optimism for British markets stating that the vaccine could be available in the UK as early as next month and vowed to roll the vaccine out to those in need as quickly as possible.
The news was welcomed by investors and has reinstalled confidence in the market that the UK economy could stage a recovery sooner than expected.
Traders also shrugged off a report that British employers made a record number of staff redundant in the third quarter. According to data released by the Office for National Statistics, the UK’s unemployment rate rose in line with expectations to read 4.8% in September, a four year high. The recent extension of the furlough scheme until the end of March has likely limited the impact of this figure as you would expect jobs to be preserved until then.
The euro was weaker against a basket of currencies yesterday following the underwhelming release of Eurozone and German ZEW economic sentiment indexes. The ZEW economic indexes measure investor sentiment, reflecting the difference between the share of investors that are optimistic and those that are pessimistic.
Both figures weighed heavily in favour of a pessimistic view and showed a notable drop for the month of November, which didn’t help the growing anxiety over the health of the Eurozone economy.
- 13:00- EUR- ECB President Lagarde Speech
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