Pound (GBP) Undermined by Brexit Jitters
The Pound (GBP) edged lower against its peers at the start of this week as the currency was undermined by fears that talks remain in limbo, dashing hopes a trade deal could be found ahead of this week’s EU summit.
The Brexit pessimism was not helped by Boris Johnson’s claims that the UK will ‘prosper’ even without a trade deal, while EU sources expressed concern over how recent personnel changes at Downing Street could impact talks.
With talks in Brussels continuing, it’s likely Brexit will remain the key catalyst in GBP exchange rates through today’s session, with the Pound likely to remain on the defensive unless a breakthrough can be found.
Euro (EUR) Lifted by Upbeat Mood
EUR found some modest gains on Monday, with the Euro to US Dollar exchange rate hitting a one-week high.
The Euro strengthened in response to coronavirus vaccine optimism and the resulting improvement in market sentiment.
However, these gains remained capped by the realities still facing the Eurozone economy this quarter, with the news that Poland and Hungary had blocked approval of the EU’s latest budget also dampening EUR sentiment.
Looking ahead, will a speech by European Central Bank (ECB) President Christine Lagarde offer fresh impetus for EUR investors later this afternoon?
US Dollar (USD) Muted Following New Vaccine News
The US Dollar (USD) closed yesterday’s European trading session with slight losses as demand for the safe-haven ‘Greenback’ was dampened by news of another potential coronavirus vaccine.
US biotech firm Moderna announced that its Covid-19 vaccine candidate has been 94.5% effective in phase 3 trials, which alongside news of its better shelf life than the Pfizer vaccine, brought significant cheer to markets on Monday.
Coming up later today, will the publication of the latest US retail sales figures put more pressure on the US Dollar? A suspected fall in sales growth in October could stoke concerns over consumer demand in the key holiday sales period.
Canadian Dollar (CAD) Jumps on Oil Rally
The Canadian Dollar (CAD) rallied on Monday as the oil-sensitive ‘Loonie’ accelerated in response to an approximate 4% jump in crude prices as news of the Moderna vaccine bolstered hopes that oil demand could pick up again in early 2021.
Australian Dollar (AUD) Slips from Two-Month High amid Souring Trade
After soaring to a two-month high yesterday on the back of vaccine optimism, the Australian Dollar (AUD) found itself pulling back from its best levels overnight on Monday as renewed coronavirus concerns weighed on sentiment.
New Zealand Dollar (NZD) Pares Gains on Renewed Coronavirus Jitters
The New Zealand Dollar (NZD) found itself in a similar predicament to the Australian Dollar during today’s Asian session as vaccine optimism was tempered by the realities of the challenges still facing many countries as they contend with record coronavirus cases.