23/12/2020

Sterling remains under pressure


GBP

Sterling continued to remain under pressure yesterday as Britain remained stuck in COVID-19 isolation due to the news of a new coronavirus strain, hopes of progress in Brexit talks did however help relieve some pressure off the Pound.

European Union Chief Brexit Negotiator Michel Barnier said the EU is giving a final push to reach a deal on future trading ties with Britain. In a call on Monday, British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen have also further discussed current disagreements over fisheries that are barring a new trade deal, as well as the updates on the coronavirus.

Rumours from the EU have claimed that the bloc was now willing to accept a reduction in the value of its catch in UK waters of up to 25% over a period of time from 2021, providing a big boost to talks if true.

In the event of a successful agreement of a Brexit deal, Sterling is still expected to be volatile due to new lockdowns and border closures. The EU did extend a helping hand yesterday as they recommended that its 27 members roll back sweeping border closures to let people return home for Christmas and to allow freight to resume between the UK and mainland Europe.

Recent data actually showed a positive note that Britain’s economic recovery from the pandemic was quicker than expected in the third quarter.

Key announcements

  • 13.00 – US – Durable goods orders, expected to drop to 0.6% from a previous reading of 1.3%
  • 13.30 – US – non defence capital goods orders, expected to drop to 0.6% from 0.7% previous


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