Pound Lower On Brexit Concerns
The pound weakened against its major counterparts in the European session on Tuesday, as significant differences remained on key issues between the U.K. and the European Union, triggering uncertainty over a post-Brexit trade agreement before the end of this month.
UK Prime Minister Boris Johnson will travel to Brussels to meet the European commission President Ursula von der Leyen in the coming days as talks remained deadlocked on three critical issues: level playing field, governance and fisheries.
Negotiators are preparing “an overview of the remaining differences” in a last ditch effort to strike a trade deal.
Surging coronavirus infections across the United States and the Europe and the imposition of restrictions dampened risk sentiment.
California announced the closure of businesses such as hair salons, movie theaters and bars and issued stay-at-home order for at least three weeks.
France is likely to delay lifting Covid-19 lockdown next week amid signs the country will miss a coronavirus goal set by President Emmanuel Macron.
Germany is considering to impose strict restrictions as partial shutdown failed to bring down contagion rates.
The pound edged down to 138.67 against the yen, from a high of 139.19 touched at 5:00 pm ET. The pound is likely to test support around the 135.00 level, if it drops further.
Data from the Cabinet Office showed that Japan’s gross domestic product surged an annualized 22.9 percent in the third quarter of 2020.
That beat expectations for an increase of 21.5 percent following the 28.8 percent plunge in the previous three months.
The pound fell to 1.1863 against the franc, after rising to 1.1910 at 5:45 pm ET. On the downside, 1.17 is possibly seen as its next support level.
Data from the State Secretariat for Economic Affairs showed that Switzerland’s jobless rate was stable in November.
The jobless rate was a seasonally adjusted 3.4 percent in November, same as seen in October. This was in line with economists’ expectations.
The pound slipped to 1.3323 against the greenback, compared to 1.3376 hit late New York Monday. Next key support for the pound is likely seen around the 1.29 mark.
The pound touched 0.9090 against the euro, declining from a high of 0.9043 seen at 5:00 pm ET. The pound is poised to target support around the 0.92 level.
Revised data from Eurostat showed that the euro area economy recovered at the fastest pace on record in the third quarter driven by household spending, investment and exports.
Gross domestic product grew sharply by 12.5 percent sequentially, reversing the 11.7 percent fall in the second quarter. The growth rate was revised down marginally from 12.6 percent.
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