Markets watch with bated breath as Brexit deadline approaches; announcements from the ECB are expected.
FX traders still have high hopes that a Brexit deal can be reached in the very near term. This was evidenced by the GBP/USD pair holding above the $1.33 level. There are still concessions to be made on both sides according to the latest media reports, with issues on fishing, dispute resolution and state aid continuing to be sticking points. Though hope for a deal is keeping sterling elevated, the impact of the COVID-19 virus on the UK economy is also weighing on sentiment. One analyst says that given the economic impact by the coronavirus, plus the major increase in the government's current account deficit, he expects to see an increase in inflation risks to develop in the medium term, and said that that could also shift sentiment for sterling as a result.
In London trading as of 11:22 am, the GBP/USD was trading higher at $1.3346, a gain of 0.2584%; the pair has ranged from a session peak of $1.33585 to a low of $1.32976. The EUR/GBP was lower at 0.8977 pence, down 0.0735% and off the session high of 0.90016 pence while the low was recorded at 0.89569 pence.
Markets Focus on EU
Later today, markets will wait to see what the head of the European Central Bank will have to say about the Eurozone economy and the impact on the euro. Christine Lagarde, president of the ECB, will be speaking later today at two different events: first, at a Eurogroup meeting and second, at a meeting organized by the European Policy Center. Markets will also be watching for the release of preliminary inflation data for Germany; analysts expect that the November Harmonized Index of Consumer Prices will be flat on a year-on-year basis, but fall to -0.8% month-on-month. Currently, the EUR/USD is trading at $1.1988, up 0.209% and off the session high of $1.19908.