No-Deal Brexit Edges Closer and Puts Pressure on the Pound

At the start of trading on Wednesday, the Pound edged higher following hope that a Brexit trade deal was edging closer after news that there might be room for compromise on fishing rights became apparent.  However, the afternoon saw the currency take a dip after the news took a turn and further talk ended with an agreement still not being reached. At the end of trading, the Pound finished at 1.1066 against the Euro and 1.3366 against the US Dollar according to the Foreign Exchange Market.

After calls from German Chancellor Angela Merkel to bring in tougher restrictions over Christmas, the Euro found itself on the back foot. The suggested closure of non-essential businesses would likely cause Europe’s largest economy to experience a double-dip recession and that would place further pressure on the single currency.

Improving market sentiment saw investors move away from the US Dollar, leaving the currency on the defensive on Wednesday. This was down to a blend of Brexit optimism and news that more US stimulus is likely as the latest package is nearing completion. Following this, the news of spiralling coronavirus cases is still causing problems for the currency although the introduction of a vaccine might help it turn a corner.

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