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Vaccine and Brexit hopes inspire Sterling rise

23 Nov 2020

Optimism about a potential COVID-19 vaccine boosted the British sterling at the start of the week, paired with hopes over a successful Brexit deal.  The news made riskier currencies seem more attractive for investors. Brexit negotiations will resume this week, as we get closer to the deadline. 
Britain’s post-Brexit transition period ends in less than six weeks. On Monday, the pound was being traded 0.7% higher, at 1.3382 against the USD, and at 88.75 against the euro. 
Ulrich Leuchtmann, FX strategist, said “The FX market is seeing it as a GBP positive sign that the negotiations are being continued in December.” 
Reports claimed that the AstraZeneca vaccine could be around 90% effective without any serious side effects, helping to sustain the British pound’s gains. 
On the other hand, the USD remained on the low, down 0.1% versus a basket of currencies at 92.234. This follows last week’s drop of 0.4%. “Assuming the PMIs are not sharply weaker than consensus, we could see EUR/USD drifting up the 1.1915/20 area,” ING stated. 
Ahead of the discussions about the EU’s 1.8 trillion euro COVID-19 recovery plan, the euro’s value was up to $1.1868. 
Moreover, the Australian dollar increased to $0.73285 whereas the New Zealand dollar rose to a two-year high at $0.6952, supported by strong retail sales data.