04/12/2020

Sterling hits one year highs against the US Dollar


GBP

The pound rallied against the euro and moved to it’s best level for a year against the dollar yesterday as a Brexit conclusion drew nearer.

According to various reports during early Thursday trade UK-EU trade talks were on course for a much needed breakthrough with some reports suggesting the “big push” was underway and that the bulk of the outstanding issues would be ironed out over the next 24 hours. This created optimism amongst investors and saw a flurry of GBP purchasing which lead to a sharp appreciation in cable, causing it to trade at its best level since the 13th December 2019.

The optimism proved to be premature as the pound parred some of its gains late on Thursday as the Brexit pendulum swung back again injecting no deal fears into the market as reports filtered through that negotiations had hit a snag.

British officials commenting on the state of play warned that talks were at risk of going backwards as the European Union have made new demands at the 11th hour with France hardening its position and threatening a veto to a potential Brexit deal. This is significant and follows Wednesday’s news flow which caused sterling to fall to month lows against the euro as French diplomats raised concerns that the EU were offering too many concession and called for the European Union to walk away from talks if the U.K. do not compromise on fisheries.

Countering the British statements, EU officials brushed off the reports stating that the remarks were simply an effort from the U.K. to disguise the fact that the U.K. are offering concessions. Despite this bump in the road, both sides have maintained that a deal remains close with the key outstanding issues remain.

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