Gray Structure

4th December 2020

HOW HAS THE POUND BEEN PERFORMING?

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Against the US Dollar

After a strong performance last week, the Pound held it's ground on Monday's market open, maintaining a trading level above 1.3300. With eyes largely focussed on two key areas this week coming in form of the progress made as the UK storms ahead in the race to vaccinate against Covid-19, and the diminishing time line to secure and finalise a Brexit deal. As we progressed into the week, Sterling accelerated, breaking the 1.3400 barrier on Tuesday afternoon, finding comfort and stability even against positive economic data figures from our friends over the pond in the US. The Pound took a wobble for the first time on Wednesday morning, giving up ground and retracting back into the 1.3300 range from it's earlier gains. It wasn't long however before bouncing back once again, as the UK and EU battle to conquer the final hurdles in the ongoing Brexit negotiations with fisheries still proving to be the final joker card in the deck. As the week draws to a close, US Nonfarm Payroll figures alongside the US Unemployment Rate data is due around 2:30pm today as we wait to see if positive postings could perhaps pull Sterling's position back before the weekend break.
 

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Against the Euro

After last weeks positive trends which had seen the pair break the 1.1200 level, trading opened on Monday back in the 1.1100 range. Early steady gains continued with Brexit talks going seemingly well until Wednesday evening when we saw the Pound retract for the first time and moved lower back to into the 1.1000 range with Chief Negotiator Michel Barnier feeling the pressure of other EU member states who reminded him not to cross the bloc's red lines in order to reach a deal with the UK. This point was driven home with one EU diplomat stating "We are millimetres from the bottom line of the mandate. For some issues, we're even on the red line, and we don't want to cross it,". France seem the most vocal in concerns over worries about final concessions, although others such as Belgium, the Netherlands and Denmark are equally worried when it comes to giving up rights to UK waters. As we close out the week, we currently find the pair trading around 1.1042 as of this morning as we await any further news on developments.

 

Brexit, Covid & Economic Data

- If you have US Dollars or Euros to buy or sell please contact the desk. It's important to try and get the timing right with the Pound being very volatile, our desk can try and support to the best we can.

- On going meetings/negotiations with the UK & EU will fluctuate the Pound.


Please note, this can cause a negative impact for Sterling.

ECONOMIC CALENDAR

Next week​

7th December - 11th December 2020

Monday:

08:00 EU German Industrial Production (MoM)(Oct)
00:01 UK BRC Like-For-Like Retail Sales (YoY)(Nov)

Tuesday:

11:00 EU ZEW - Economic Sentiment (Dec)
11:00 EU Gross Domestic Product (QoQ)(Q3)
11:00 EU Gross Domestic Product (YoY)(Q3)
11:00 EU German ZEW - Current Situation (Dec)
11:00 EU German ZEW - Economic Sentiment (Dec)
14:30 US Nonfarm Productivity (Q3)
14:30 US Labor Costs (Q3)

Wednesday:

08:00 EU German Trade Balance s.a. (Oct)
16:00 CAD BoC Rate Statement
16:00 CAD BoC Interest Rate Decision

Thursday:

01:00 EU European Council Meeting (All Day)
08:00 UK Manufacturing Production (MoM)(Oct)
08:00 UK Industrial Production (MoM)(Oct)
08:00 UK Gross Domestic Product (MoM)(Oct)
13:45 EU ECB Interest Rate Decision
13:45 EU ECB Deposit Rate Decision
14:30 US Initial Jobless Claims (Dec 4)
14:30 US Consumer Price Index ex Food & Energy (MoM)(Nov)
14:30 US Consumer Price Index Core (YoY)(Nov)
14:30 EU ECB Monetary Policy Statement & Press Conference
20:00 US Monthly Budget Statement (Nov)

Friday:

01:00 EU European Council Meeting (All Day)
N/A UK Financial Stability Report
09:00 EU German Harmonized Index of Consumer Prices (YoY)(Nov)
14:30 US Producer Price Index ex Food & Energy (YoY)(Nov)
16:00 US Michigan Consumer Sentiment Index (Dec) PREL