The Great Britain pound rose today, emerging as the strongest currency on the Forex market on Monday. The most likely reason for the sterling’s amazing performance was hopes for a trade deal between the United Kingdom and the European Union.
The deadline of December 31 nears but there is no deal in sight. Just a few sticking points remained but the EU and the UK seem to have a hard time finding a compromise on them. Markets were hopeful, though, after UK Foreign Minister Dominic Raab told BBC on Sunday:
I do think this is a very significant week, the last real major week
Officials from both the UK and the EU signaled that they want to reach an agreement but they will not try to reach a deal at any cost, being fully prepared for a no-deal scenario. The absence of a trade deal can strongly hurt both EU and Britain’s economies, therefore markets fear such an outcome, and it will likely be devastating to the pound.
For the rest of the week, traders will watch for developments in the Brexit talks, news about the COVID-19 pandemic and vaccines against it, and macroeconomic data. The most important report for Britain this week will the manufacturing Purchasing Managers’ Index released by Markit tomorrow. The services PMI will be released on Thursday and the construction PMI on Friday.
GBP/USD rose from 1.3327 to 1.3342 as of 19:09 GMT today. EUR/GBP declined from 0.8974 to 0.8955. GBP/JPY rallied from 138.54 to 139.17.
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