After a strong round of buying pressure early in the week, Sterling was hit with Brexit uncertainty to bring it back to earth. Fortunately, positive economic updates and optimistic outlooks help keep the pound a net winner at the end of the week.
United Kingdom Headlines and Economic data
A strong, uniform move higher for Sterling during the Monday session, which didn’t seem to have direct catalyst from the UK, but could have been supported by broad risk-on sentiment (likely on a mix of stories including a change of heart on face masks by U.S. President Trump, optimism of a EU Recovery fund deal, and another positive COVID-19 vaccine update, this time from the joint project between Oxford and AstraZeneca).
Price action in Sterling pairs shifted net negative, likely mainly influence by Brexit uncertainty and continue broad positive risk sentiment, this time after the EU finally gets a deal done on the recovery fund and positive expectations of another round of U.S. stimulus soon.
Sterling weakness from Tuesday continued through the Wednesday session as hopes of a Brexit deal continued to fade. GBP did stabilize and bounce through the U.S. session, possibly on shifting risk sentiment on rising tensions between U.S. and China (U.S. charges two Chinese nationals in coronavirus vaccine hacking scheme, U.S. gives China 72 hours to shut Houston consulate) or counter currency flows.
Sterling traders pushed the market lower during the London session, likely a reaction to the news above, but flipped to switch during U.S. session trade. It was likely U.S. dollar weakness (signs of a weakening rebound of the U.S. jobs sector) and other counter currency flows that help GBP gain on the session.