GBP/USD: Pound Steady As Parliament Votes Down 8 Brexit Options
  • Pound (GBP) pares some losses from last week as Michel Barnier returns to London to resume Brexit trade talks
  • Boris Johnson sounded upbeat regarding a deal
  • Euro (EUR) trades broadly higher versus peers in risk on mood after Joe Biden win
  • German trade data in focus

The Pound Euro (GBP/EUR) exchange rate is edging higher at the start of the week, paring some losses from last week. The pair shed -0.2% last week settling on Friday at €1.1078, around 100 pips off the weekly high of €1.1184, a level last seen 2 month ago. At 05:15 UTC, GBP/EUR trades +0.08% at €1.1090 in muted trading.

Prime Minister Boris Johnson’s optimism that a trade deal could be achieved is keeping the Pound buoyant at the start of the week. Boris Johnson said that a trade deal “was there to be done” indicating that a broad agreement outline was already “pretty clear”.

Any deal should be agreed by mid-November to allow for ratification. Many businesses are hoping that the spiralling covid cases in Europe will help focus the minds of those trying to achieve a deal. Although difference remain over fisheries and a level playing field.

Chief negotiator Michel Barnier and his UK counterpart David Frost will resume talks in London today.

The UK was also looking separately for a trade deal with the US, however there are some suggestions that Boris Johnson could struggle to form a close bond with Joe Biden, who has previously cast doubt over Brexit.

The Euro is also trading on the front foot versus its major peers, boosted by risk appetite as the markets cheer a Joe Biden win. Expectations of less confrontational policies under Biden and a split Congress meaning political gridlock for four years is lifting the market mood. Contrary to expectations of a blue wave, the House of Representatives look to remain under Democrat control whilst the Senate will also certainly remain in the hands of the Republicans. As such, market unfriendly policies such as tax hikes are unlikely to be agreed.

Looking ahead German trade data will be in focus. Exports are expected to increase 1.4% month on month, down from 2.4%. Meanwhile imports are also expected to slip to 1.4%, down from 5.8%