Mixed week for the British pound, but finishing arguably net positive as sentiment on a Brexit deal seemed to be more optimistic than not for most of the week. Counter currency flows were also an influence given unusual strength in CAD, EUR, and CHF this week.
United Kingdom Headlines and Economic data
Confidence in UK housing market cooled in November – Halifax House price sentiment tracker fell to 51.6 from 52.4 in October.
U.K. Set to Be First to Clear Pfizer-BioNTech Covid Vaccine – The shot was 95% effective in a clinical trial of almost 44,000 people, with no significant safety problems so far.
UK mortgage approvals jump again to 13-year high – Mortgage approvals for house purchase hit 97,532, up from 92,091 in September and higher than a median forecast of just under 84,500 in a Reuters poll of economists.
U.K. Manufacturing sector growth improves but consumer
goods industry remains in doldrums – “The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index rose to a 35-month high of 55.6 in November, up from 53.7 in October. ”
Barnier Tells EU Envoys Three Main Brexit Issues Unresolved – The British pound soured on the session on this news that the level playing field for businesses, access to British fishing waters and agreement enforcement are still holding back a final deal.
France Floats Veto Threat on Brexit Deal as EU Feels Strain – “France is leading a group of countries worried that Barnier will surrender too much access to British fishing waters and back down on conditions designed to prevent U.K. businesses getting an unfair competitive advantage.”
Renewed downturn in UK service sector activity, but optimism reaches its highest level since February – “IHS Markit/CIPS UK Services PMI Business Activity Index dropped to 47.6 in November form 51.4 in October”
Prospect of breakthrough receding’ in UK-EU talks – we begin to see Sterling’s rally stabilize and take a dip during the U.S. session on this development. Enforcement of the new rules seems to be the sticking point at that time.
“After one week of intense negotiation in London, the two chief negotiators agreed today that the conditions for an agreement are not met, due to significant divergences on level playing field, governance and fisheries.
“On this basis, they agreed to pause the talks in order to brief their principals on the state of play of the negotiations.”
Stronger construction sector growth led by fastest rise in new orders since October 2014 – The index rose to 54.7 in November from 53.1 in October.
Brexit Negotiators Race to Save Trade Deal Amid Spat With France – talks will continue into the weekend with U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen to hold a crisis call. Sterling seems to have taken as step back before the close as a deal still seems far away, and possibly on traders taking some risk off before the weekend.