GBP

Sterling continued to trade at one-week highs against both the Dollar and Euro as Sterling was aided by a weaker U.S. dollar and by increased hopes that the UK will forge a post-Brexit trade deal with the European Union before the January deadline.

The EU and UK chief negotiators did however announce yesterday evening that the talks will take a step back after a member of the EU team tested positive for Covid-19. EU chief negotiator Michel Barnier said his UK counterpart David Frost had agreed to suspend negotiations between them for a short period of time, it is currently unknown just how long the delay in talks will be.

Suspension of talks between the chief negotiators comes at an inconvenient time, with just five weeks remaining before the 31 December deadline.

USD

The Dollar managed to slow losses yesterday after US Treasury Secretary Steven Mnuchin signaled an end to some of the Federal Reserve’s pandemic lending, which took off some of the risk on attitude in the market, which come as a surprise to currency markets that expected central bank support for the foreseeable future. The announcement reversed the previous mood after reports that the US Senate Republican and Democrat leaders had agreed to resume negotiations on another stimulus package.

California have announced a major escalation of measures in response to surging Coronavirus cases in the major west coast state.

Key announcements

All day – G20 meeting