Although some reports suggest that a post-Brexit trade deal with the EU could be agreed to by next week, others have indicated that there is a risk of talks breaking down over the main sticking points such as fisheries. This held the Pound back from making any significant gains yesterday although the market remains cautiously optimistic. This morning, UK consumer price index inflation beat the market’s expectations at 0.7% which has given the Pound a boost against both the Euro and Dollar. This could delay negative interest rates potentially being introduced by the Bank of England for now.

ECB President Lagarde has said that the central bank has already incorporated coronavirus immunity in 2021 in its forecasts and mentioned that additional monetary stimulus will be introduced in the near future. Eurozone consumer price index inflation is due at 10am which may cause some short-term volatility. Germany has reported 17,561 new coronavirus cases today which is still on the high-end. The market will pay close attention to the reaction by state leaders to Chancellor Merkel pushing for tighter restrictions next week.

US Industrial production came out as expected at 1.1% although US retail sales disappointed the market with a release of 0.3% compared to 0.5% that was forecast which in turn weakened the greenback. Federal Reserve Chairman Powell added to this by saying that the road to recovery from the pandemic is long whilst highlighting the downside risks that could entail if virus cases keep climbing in the US.