Will UK GDP & Brexit Woes Pull The Pound Lower vs. Euro?
  • US markets hit by stimulus worries.
  • Brexit-deal uncertainty continues despite high profile meetings.
  • GBP awaits UK GDP, ECB, Brexit headlines.

US equities failed to keep early gains yesterday and finished the day in the red as market participants worried over fiscal stimulus discussions and the news of Facebook facing a US government antitrust suit. NASDAQ led the downslide with a fall of 2.15 Percent at the close while Dow Jones shed 0.35 Percent, S&P 500 fell -0.79 Percent, and Russell 2000 declined 0.82 Percent.

The lawmakers are facing another government shutdown unless one-week stopgap funding measures are approved through voting before Friday. Successful funding approval means the deadline will shift to December 18. The lawmakers might also push the fiscal stimulus discussions along with the emergency funding bill as the country is facing economic troubles due to the sharp increase in coronavirus cases.

UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen couldn’t make much progress on Brexit-deal during their dinner meeting. But European Commission President asked the negotiation teams to reconvene immediately to work around the obstacles before the start of next week.

Today’s Asia-Pacific trading was expected to have a cautious tone due to the overnight developments.

The New Zealand dollar trades higher against the pound, and the GBP/NZD might be volatile as it awaits UK GDP numbers. The ECB interest rate decision might increase the volatility surrounding the euro and pound, as ECB President Lagarde might expand the Pandemic Emergency Purchase Program.

Traders will be focused on the broad covid theme and US stimulus talks, despite the Brexit headlines. With the vaccine news mostly priced in – positive data points nearly confirming Pfizer vaccine’s approval in the US after the recent go-ahead from the UK and Canada. Now, the attention will be on the pace of distribution to a large number of people.

Australia and New Zealand are in a better position than the UK and US regarding the pandemic spread. Any covid related setback on the global sentiments will have an outsized reaction than Brexit headlines in the case of GBP/AUD and GBP/NZD.