The major news that rocked both stock and foreign exchange markets yesterday was the revelation that Pfizer have developed a vaccine showing near 90% success in preventing COVID-19. Whilst there is a tremendous amount of work to do with regards to additional trials, supply issues and sign off for mass production – risk flows globally jumped at the chance to be first to the hopeful beginning of the end for the pandemic’s impacts on global markets.
A key beneficiary of these risk flows in the currency world was the pound, notching up 1.10% against the euro and 0.85% versus the already under pressure dollar; as the US election has now concluded, the dollar has seen a significant amount of weakening as investors look to move away from the safety of the dollar and into more risky assets. In addition, Deutsche Bank have suggested that GBP will be a “major beneficiary” of the Pfizer news, as the UK took measures earlier on in the year to pre-order with the firm – adding to the UK’s already top of the class vaccine orders per person total globally.
As with most days for sterling, Brexit talks are back in the spotlight, as negotiators continue to battle on the key sticking points with regards to pushing a deal through before the end of the year. As mentioned in previous updates, the seemingly innocuous issue of fishing rights is still a byword to the progression of talks in general, due to its highly politicised nature. On the issue, it seems the UK is looking to offer compromise by means of a timed offer that “might span a couple, three years for instance” to get past the deadlock. GBP markets will be watching intently meaning headline based volatility hogged by last weeks US election now falls back onto the UK.
Have a great day.
Author: Joshua Haden-Jones, Senior Relationship Manager
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