The Pound has continued to strengthen as the market is more optimistic that a Brexit deal can be done with rumours suggesting that Conservative MPs believe that a deal is on the horizon This morning, UK consumer price index inflation came out worse than expected at 0.3% compared to 0.6% that was forecast. Nonetheless, Sterling bulls shrugged this off and remain upbeat.
This morning, both German and French manufacturing and services PMI data beat the market’s expectations which have given the Euro some support against the Dollar. Germany has begun a hard lockdown today which will last until 10th January after the country reported 27,728 new cases and a further 952 deaths.
The Dollar remains weak due to a lack of demand for its safe-haven status. This afternoon, US retail sales as well as manufacturing and services PMI data will all be released and are likely to cause some volatility. The market will also pay close attention to the FOMC interest rate announcement and press conference for any relevant comments.