Pound (GBP) Fluctuates amid More Brexit Drama
The Pound (GBP) struck higher through yesterday’s European trading session, amidst renewed hopes for a Brexit trade deal after UK Cabinet Office Minister Michael Gove suggested there was scope for compromise on fishing rights, one of the key road blocks in talks.
However, Sterling subsequently fell back later in the evening after a meeting between Boris Johnson and European Commission President Ursula von der Leyen ended without an agreement being found.
In addition to Brexit uncertainty, the release of the UK’s latest GDP figures look to weigh on Sterling this morning, after October’s monthly release reported slowing growth at the start of the fourth quarter.
Euro (EUR) Retreats as Merkel Urges Tougher Lockdown over Christmas
The Euro (EUR) fell back on Wednesday, after German Chancellor Angela Merkel called for much tougher restrictions over the holiday period.
Merkel is seeking the closure of all non-essential business between 24 December and 10 January, a move which is likely to increase the chances of Europe’s largest economy slipping into a double-dip recession this winter.
In the spotlight for EUR investors today will be the conclusion of the European Central Bank’s (ECB) latest policy meeting.
The ECB is widely expected to announce an expansion to its stimulus programme this month, which alongside a potentially gloomy outlook for 2021 could weigh on the single currency.
US Dollar (USD) Weakens in Upbeat Trade
The US Dollar (USD) found itself on the defensive yesterday as demand for the safe-haven currency was undermined by improving market sentiment.
This was partly driven by Brexit optimism but also amid hopes for more US stimulus after US Treasury Secretary Steven Munchin suggested the next package is 90% complete.
Coming up, the release of the latest US consumer price index will be of key concern to USD investors today, with the US Dollar potentially giving some ground if domestic inflation slowed in November.
Canadian Dollar (CAD) Firms amid BoC’s Cautious Optimism
The Canadian Dollar (CAD) ticked higher on Wednesday, finding support in the wake of the Bank of Canada’s (BoC) latest policy meeting, in which the bank left its monetary policy untouched and appeared generally optimistic in its economic outlook.
Australian Dollar (AUD) Rallies in Risk-On Trade
The Australian Dollar (AUD) struck higher overnight on Wednesday, supported by a modest improvement in market risk appetite and a weaker US Dollar.
New Zealand Dollar (NZD) Tempered by Disappointing Data
The New Zealand Dollar (NZD) also sought to rally in overnight trade, but was only able to find limited support as a sharp slowing of NZ electronic card retail sales stoked concerns of subdued economic activity in November.