The pound has made some gains as we start the last week of 2020. It has advanced on the euro, dollar and other major currency rivals this morning. However, it could still have some resistance from its American and European rivals over the course of the week. What is a risk for the British pound, is the upcoming start of trade talks between the UK and EU ahead of Brexit. At the time of writing, the pound is 1.1721 against the euro, and 1.3122 against the dollar.
Over the holiday period, the dollar had been doing well, with investors selling it and buying other currencies. However, today we have seen a reversal. Both the euro and sterling have recovered against the dollar, as it made several gains in the Christmas week.
American Foreign Affairs Hit Dollar
The headlines today have been dominated by reports of an American missile strike on a militant group in Iraq and Syria, backed by Iran. American Secretary of State Mike Pompeo was reported to have said that further strikes might take place, so the markets are hedging their bets with this warning. Fresh tensions between the Gulf and America have prompted a slow down in the markets.
This has not stopped the British pound from storming ahead of its rivals early this morning, as it was quoted .55% higher against the dollar and .16% higher over the euro at the time of writing. Sterling moved quite a bit around the UK election, but stopped at the 1.35 level when measured against the dollar.
New Year Brexit Resolutions
The British pound stabilised on Friday after the new European Commission Chief Ursula Von der Leyen told European press that an extension to the Brexit transition period would be necessary in order for a trade deal between the UK and the EU to be concluded. This goes against what Boris Johnson has planned for, as before Christmas he legislated against any extension to the Brexit transition period.
However, they would not have to decide on an extension until mid-2020, and as we’ve all seen over the past few years, anything is possible, whether it is legislated for, against, or never even mentioned.
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