Brexit trade talks with the EU have been extended until next Sunday after both parties agreed to ‘go the extra mile’. As a result, the Pound has strengthened against both the Euro and Dollar as the market saw renewed hope that a deal can be negotiated. However, Prime Minister Johnson has warned that a no-deal Brexit still remains the most likely outcome.
Germany has announced that a hard lockdown will be imposed from 16th December until 10th January as Europe’s largest economy saw record numbers of daily cases and deaths recently. Consequently, the Euro has seen some slight weakness although German economy minister Altmaier believes that another recession can be avoided as they have acted quickly.
With the FOMC meeting due on Wednesday evening, the market widely expects that the Federal Reserve will extend their bond-buying programme that was brought in at the start of the pandemic until certain conditions of economic recovery are met in the US. Overall, the Dollar still remains weak due to optimism over coronavirus vaccines.