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Pound Spikes Up On Trade Deal Hopes

The pound firmed against its major counterparts in the European session on Monday, as news that UK Prime Minister Boris Johnson is considering to intervene in Brexit talks raised optimism about a last ditch deal.

The Telegraph reported that Johnson is planning to speak to European Commission President Ursula von der Leyen this week in an attempt to “clear away final barriers” to a trade deal.

Markets speculate that a UK-EU Brexit deal was getting closer despite uncertainty over key sticking points.

Talks will resume virtually today after members of the EU negotiating team were diagnosed with COVID-19 last week.

European markets advanced on optimism over the possibility of an early rollout of coronavirus vaccine after the Oxford University and British pharmaceutical giant AstraZeneca announced that their vaccine for the novel coronavirus could be around 90 percent effective under one dosing regimen.

The pound appreciated to 1.3381 against the greenback, its highest level since September 2. The pound is seen challenging resistance around the 1.35 region.

The pound rose to near a 2-week high of 138.88 against the yen, from Friday’s closing value of 137.92. The pound is likely to challenge resistance around the 140 level.

The GBP/CHF pair hit near a 2-week high of 1.2186, compared to Friday’s closing quote of 1.2100. The pound is poised to find resistance around the 1.25 area.

The pound climbed to near a 2-week high of 0.8874 against the euro, from last week’s closing value of 0.8919. Next key resistance for the currency is likely seen around the 0.86 region.

Flash survey data from IHS Markit showed that the euro area private sector contracted sharply in November as member countries reintroduced more restrictions to counter the spread of Covid-19 infection.

The composite output index plunged to a six-month low of 45.1 from the neutral 50.0 in October. The score was forecast to fall to 45.8.

Looking ahead, Markit’s U.S. flash composite PMI for November is scheduled for release in the New York session.

The material has been provided by InstaForex Company – www.instaforex.com