Pound (GBP) Jumps as Talks Enter the ‘Tunnel’’
The Pound (GBP) was left mostly rangebound through most of yesterday’s trading session amidst concerns that UK-EU trade talks remained in limbo.
However, Sterling spiked towards the end of the European session following reports that Brexit negotiations have entered the so-called ‘tunnel’ stage of intensive negotiations.
This sent the Pound to US Dollar above the $1.34 barrier but GBP/EUR failed to make the same gains due to a strong Euro.
In the absence of any notable UK data releases today, we will no doubt see GBP exchange rates remain highly sensitive to Brexit developments, this is seeing the Pound tumble this morning following suggestions from the EU’s chief negotiator, Michel Barner, that a deal ‘hangs in the balance’.
Euro (EUR) Defies Gloomy Inflation Reading
After slipping overnight on Monday, the Euro (EUR) mounted a convincing recovery on Tuesday, aided by broad weakness in the US Dollar (USD).
This led to the Euro to US Dollar exchange rate soaring to $1.20 during yesterday’s session.
This uptick in the single currency came in spite of the Eurozone’s latest consumer price index printing below expectations and leaving the bloc in a state of deflation through November.
Coming up, the spotlight for EUR investors this morning will be on the Eurozone’s latest jobs report. Will another bump in the bloc’s unemployment rate last month take some of the wind out of the Euro’s sails?
US Dollar (USD) Undermined by Stimulus Hopes
The US Dollar sell-off resumed through yesterday’s trading session, with speculation over another round of US stimulus bolstering market sentiment and tempering demand for the safe-haven currency.
Adding to the pressure on the ‘Greenback’ was a worse-than-expected ISM manufacturing PMI, which reported a contraction in employment in the factory sector last month.
Turning to today’s session the focus for USD investors will be on the latest ADP employment figures, where a bump in employment growth may bolster hopes for Friday’s more influential payroll figures.
Canadian Dollar (CAD) Buoyed by Positive GDP Release
The Canadian Dollar (CAD) ticked higher on Tuesday as Canada’s latest GDP release revealed the country returned to growth in the third quarter, although these gains were tempered somewhat as the economy rebounded at a slower pace than expected.
Australian Dollar (AUD) Rallies on Upbeat GDP Figures
The Australian Dollar (AUD) struck higher overnight on Tuesday, after Australia’s latest GDP figures reported a larger-than-expected expansion in economic growth in the third quarter.
New Zealand Dollar (NZD) Strengthened by Vaccine Approval
The New Zealand Dollar (NZD) also rallied in overnight trade, with the news that the Pfizer/BioNTech vaccine has been approved in the UK, and the expectation that US and EU approvals will swiftly follow, helping to bolster market risk appetite.