Sterling moved lower against the euro as Forex traders hold their collective breath for clarity on this week's Brexit negotiations. This time, the concern is the British government's ability to eke out a trade deal with the EU, post-Brexit; and while most analysts believe it will be accomplished, they also agree it is likely to be lacking in substance. Markets are also waiting to hear two pieces of relevant news from the government: first, the latest forecast on government spending, with the Chancellor of the Exchequer presenting details, and second, the economic projections put forth by the Office of Budget Responsibility. How the coronavirus pandemic impacted growth and spending will be of great importance to market players in gauging the strength of the pound.
In London trading as of 11:02 am, the GBP/USD was trading lower at $1.3315, down 0.3085% and sliding off the session peak of $1.33853. The EUR/GBP was higher at 0.8935 pence, a gain of 0.3685%; the pair has ranged from a low of 0.88920 pence to a peak of 0.89392 pence in today's session.
Dollar Outlook as Safe Haven Shifts
Currency strategists caution that the US dollar may come under pressure as a safe haven currency, given that the outlook for a COVID-19 vaccine seems to be improving on a daily basis. That, coupled with news of the transition process for the Biden team, has helped to shift sentiment away from risk. Yesterday's media report that President-elect Biden has tapped former Fed chief Janet Yellen to lead the Treasury Department helped to cheer equity markets, with Wall Street closing markedly higher. The AUD/USD and the NZD/USD were both lower at $0.7339 and $0.6968, moving away from their respective session high of $0.73741 and $0.69903.