- Fading optimism for a last-minute Brexit trade deal dragged on sterling.
- USD rises on safe haven flows.
The UK & EU still haven’t agreed a post Brexit trade deal. Talks are stalled over the so-called level playing field and fisheries. News that the European Commission could publish no-deal plans hit demand for the Pound. After struggling above 1.3300 GBP/USD sold off in early European trade.
The pair declined to 1.32 as a reasonable pick up in US Dollar demand added pressure to the GBP/USD. Concerns over the economic fallout from tighter lockdown restrictions overshadowed vaccine optimism.as a result, risk sentiment boosted demand for the safe haven greenback.
Investors could sit on the sidelines waiting for the Brexit update. EU negotiators are reportedly due to update the 27 member states on the latest in Brexit trade talks with Britain on Friday.
Looking ahead, Philly Fed Manufacturing Index and Initial Weekly Jobless Claims will be in focus. The data, in addition to risk flows and covid developments could drive the USD.
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