After a rally on Monday, Sterling fell against most of the majors to close as a net loser on Friday. Difficulties with Brexit negotiations was the likely main factor, as well as counter currencies flows as some of the majors strengthened on a positive lean in global risk sentiment.
United Kingdom Headlines and Economic data
Flash PMI signals renewed economic decline as UK endures second lockdown – Flash UK composite PMI falls to 47.4 in November vs. 52.1 in October
EU’s Barnier says “fundamental divergences” persist in UK trade talks – “Major gaps remained on divvying up fishing rights and ensuring economic fair play for companies, including on state aid.”
UK orders health service to be ready for vaccine by December – “Britain expects to have 10 million doses of the vaccine available by the end of the year.” – This may have been the likely driver for Sterling’s rally on Monday as traders likely speculated another lockdown may not be needed if vaccines are distributed in December.
“I think the long-term effects … would be larger than the long-term effects of Covid,” Bailey said Monday in response to a question from a lawmaker on what would happen if the UK government does not complete a deal before the December 31 deadline.
“It takes a much longer period of time for what I call the real side of the economy to adjust to the change in openness and to the change in profile in trade,” Bailey added in testimony before parliament’s Treasury committee.
“Under the new rules for England, from Dec. 2 shops, hairdressers and gyms will reopen across the country, but bars and restaurants will be takeaway only in areas under the tightest restrictions.”
US president-elect’s renewed call for Good Friday peace deal to be honoured could complicate Britain’s negotiations with EU”
Another week gone, Brexit trade talks remain stuck – “The two sides have reached agreement on a swath of issues, but remain stuck on EU fishing rights in U.K. waters, compliance guarantees on any deal reached and the “level playing field” standards the U.K. must meet to export into the EU.”
Britain not accepting EU’s fish offer on Brexit: The Sun – “Britain is not accepting an offer by European Union chief negotiator Michel Barnier who is proposing that 15-18% of the value of fish quota that European fleets catch in British waters be restored to the United Kingdom”