Sterling is down against both the euro and the dollar in early trading hurt by renewed Brexit concerns. Speaking at the Guildhall yesterday, Lord Frost defended his trade policy telling city leaders that divergence from EU rules was a “national necessity”. His comments came after EU commission Vice president Maros Sefevoic earlier accused the Brexit minister of “political posturing”. The pound showed little reaction to PMI surveys released this morning for the manufacturing and services industries, which came in slightly better than expected. Bank of England policymaker Jonathon Haskel is due to speak later today.


The euro remained steady against the dollar supported by upbeat PMI data for Germany and the EU which showed ongoing expansion in the service and manufacturing sectors. However, any major gains should be capped by the fourth wave of covid hitting Europe. Yesterday, Germany’s top health official reiterated a warning that the government couldn’t exclude any measures, including another lockdown, as the country battles the virus. This followed Chancellor Angela Merkel comments that the current situation is “worse than anything we’ve seen so far”.


The dollar index reached a new 16-month high and the greenback traded at its highest level in four years against the yen after Jerome Powell was picked as Federal Reserve Bank Chairman for a second term, reinforcing market expectations that the US interest rates will rise in 2022. Reflecting the market pricing of hikes next year, the benchmark 10-year US treasury bond rose 5% on Monday. Traders will now look ahead to surveys for the manufacturing and services industries due this afternoon.

Economic Calendar

11.00 GBP BOE Haskel speech
13.30 US PMI Services survey
13.30 US PMI manufacturing survey