The Medicines and Healthcare Products Regulatory Agency (MHRA) this morning gave approval to the coronavirus vaccine developed by Pfizer-BioNTech concluding it was both safe and effective. Heath minister Matt Hancock responded to the announcement saying it was “fantastic news” and adding that “the NHS stands ready and will start vaccinating next week”. The news boosted Sterling against the dollar and it regained its foothold above 1.3400. Yesterday afternoon Times radio reported that “UK-EU trade talks have at long last entered the mythical tunnel and there were hopes on both sides of a deal by the end of the week”. EU commission President Ursula von der Leyen was also reported by Bloomberg as saying “although talks are so tricky and so difficult there could be a positive outcome by the end of the week”.
The EUR hit its highest level in 31 months against the USD overnight taking advantage of the broadly weaker greenback. Earlier this morning German retail sales for October bounced back strongly. EU chief negotiator Michel Barnier is set to reassure diplomats at a meeting this morning that he will not cave in to UK demands and will seek a fair deal. This comes after the Telegraph reported that the EU commission had received a serious warning from France that it was making dangerous concessions on redline issues.
The dollar stayed near its lowest levels in two and half years on Wednesday as traders assessed the likelihood of further fiscal stimulus. Overnight the USD hit a low not seen sine late April 2018 against a basket of currencies. Yesterday, US Treasury Secretary and Representatives speaker Nancy Pelosi held stimulus talks for the first time since the November 3rd election. President elect Joe Biden told the New York times his priority is getting a generous aid package through Congress even before he takes office in January.