GBP/USD Rates Buoyed By Extended Brexit Talks But Will Rally Last?

ASIA-PACIFIC RECAP

Equity markets moved broadly higher during the Asia-Pacific trade as market participants cheered progress in stimulus negotiations and the potential deployment of Pfizer’s coronavirus vaccine in the US this week.

Australia’s ASX 200 index nudged 0.27% higher and Japan’s Nikkei 225 index rose 0.3%, as Japanese business confidence climbed to its highest levels since the first quarter of 2020.

China’s CSI 300 index climbed 0.97% on the back of news that Beijing will step up its fiscal support efforts in the near term.

In FX markets, the extension of Brexit negotiations propelled the British Pound higher against its major counterparts, while the haven-associated USD and JPY continued to lose ground.

Gold and silver slipped lower despite yields on US 10-year Treasuries holding relatively steady at 91 basis points.

Looking ahead, Euro-zone industrial production figures for the month of October headline the economic docket alongside consumer inflation expectations out of the US.

GBP/USD Rates Buoyed by Extended Brexit Talks But Will Rally Last?

Market reaction chart created using Tradingview

EXTENDED BREXIT NEGOTIATIONS UNDERPINNING GBP

The politically-sensitive British Pound kicked-off a fresh week of trade on the front foot after UK Prime Minister Boris Johnson and EU Commission President Ursula von der Leyen agreed to continue Brexit talks in hopes of scoring a last-minute deal.

The pair released a joint statement on Sunday evening stating that “despite the exhaustion after almost a year of negotiations, despite the fact that deadlines have been missed over and over, we think it is responsible at this point to go the extra mile”.

These comments hardly point to any form of material progress being made in negotiations and with Johnson stating “we’re still very far apart on some key things”, it still seems relatively unlikely that a deal will be agreed and ratified before the December 31 deadline.

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