- Pound (GBP) remains glued to Brexit developments
- Progress in talks – deal ready early next week?
- Euro (EUR) boosted by risk on trade after Moderna vaccine news
- Sentiment to drive trading with light economic calendar
The Pound Euro (GBP/EUR) exchange rate is advancing on Tuesday paring some losses from the previous session. The par settled mildly lower in the previous session, -0.1% at €1.1127, approximately mid way between the daily traded range. At 05:15 UTC, GBP/EUR trades +0.15% at €1.1145
Brexit continues to be the key focus for the Pound in what has been labelled a key week for post Brexit trade talks. Brexit jitters dragged on the Pound on Monday, with fears growing that it may already be too late to agree to a trade deal with the EU.
UK Prime Minister Boris Johnson reiterated that he is confident that the UK will prosper without an EU trade deal if one is not agreed. His comments come as talks began again in Brussels on Monday and the UK Chief negotiator David Frost claiming that progress had been made. However, once again he highlighted that there was still a lot of work to do.
Sticking points between the two sides still centre on competition rules and state aid for businesses as well as fishing rights.
Comments from Frost that a deal could be ready early next week is offering some support in early trade on Tuesday.
Once again there is no high impacting UK economic data due for release. As a result, Brexit will remain the key driver or the Pound and comments from Bank of England’s Governor Andrew Bailey will be closely eyed.
The Euro was well supported on Monday by the upbeat mood in the market following Moderna’s vaccine announcement. The US biotech company revealed that Phase 3 clinical trials for its Covid 3 vaccine candidate found that it was 94.5% effective. Furthermore, it is easily to distribute that the Pfizer vaccine given that it can be stored at warner temperatures.
The news adds to the idea that there is light at the en of the covid tunnel. This is boosting demand for riskier assets and currencies. The safe haven US Dollar fell lower, bosting its major counterpart the Euro.
With no high impacting economic data for the region sentiment could continue to drive the Euro on Tuesday.