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No-deal Brexit looming large, impacting currencies

07 Dec 2020

On Monday, the British Pound reached 2-1/2-week lows after falling by 1% following concerns about the Brexit deal. The British Pound to Euro exchange rate was trading at 1.1126 whilst the GBP/USD stood at 1.3386. 

In addition to the Brexit deal, the UK Prime Minister Boris Johnson will also be discussing fisheries, level playing field rules and governance remain unresolved. This was confirmed by the EU Chief Negotiator, ahead of Johnson’s call EU President Ursula von der Leyen tonight. 

Analysts explained, “von der Leyen will not call it a day but will signal the possibility of an agreement at the EU summit on Thursday / Friday this week. It would not really make sense anyway that after years of Brexit drama we would not be tortured with it up to the very last minute.” 

On the other hand, the Euro-to-USD exchange rate was traded at 1.2149, after reaching its highest level since early 2018 last week. "Risks for the USD are skewed to the upside as short positioning is looking stretched and the USD increasingly trades at a discount to its shorter-term drivers,” experts noted. 

The Euro gained to a new high last week following Britain's approval of the Pfizer and BioNTech coronavirus vaccine. 

Furthermore, the GBP was being traded at 1.7180 at the start of the week.