Pound Finds Boost from Brexit Deal Extension

With the agreed extension on the post-Brexit deal deadline, the pound finds support to start the week right.

In the latest commodity charts, the GBP/USD pair gained 0.7% to $1.3317. This is its highest single-day gain on record since the beginning of the month.

The sterling benefited from the ignited optimism from traders on the possibility of a trade deal by the end of the year.

In the latest developments, UK Prime Minister Boris Johnson and his EU counterpart Ursula von der Leyen agreed to go the extra mile in the final attempt to clinch a trade deal.

The two parties remain deadlocked on fishing rights and fair competition rules. 

In a statement, Britain’s leader asserted that he dispatched his negotiating team anew. They will have to continue the talks beyond the Sunday deadline. 

On the other hand, the prime minister hinted that they would rather accept a no-deal exit if the trade deal with the European Union will touch “red flags” that will jeopardize his country’s interest.

Following the upward trend, the GBP/EUR pair managed to clinch a robust 1% gain in today’s session. It currently trades at €1.103 in the latest foreign exchange charts.

Similarly, the euro is under fresh pressure as Germany announces that it will enter a new phase of strict lockdown that will last through the 10th of January. 

This is an attempt to curb the spread of the virus as the risk of a third-wave of infections remains.

This adds another pressure to the common currency as the country remains one of its biggest revenue generators to date.

Similarly, the European Central Bank announced its stimulus measures. This is to keep the bloc’s economy afloat during and after the health crisis.

Focus Reverts to the Stimulus, Dollar Weakens

Even with the constant push-and-pull of events in the old continent, the safe-haven dollar remains weaker against its counterparts due to a number of factors.

The continued patronage by developed nations for the Pfizer-BioNTech vaccine still stars as the biggest propeller of the risk-on sentiment.

This week, another event is expected to ignite further switch to risky assets that will result in the weakening of the dollar.

The $908 million deal is expected from Congress later today ahead of the year-end meeting of the Federal Reserve.

Analysts noted that the central bank might likely retain the low-interest rates it currently observes the support the trudging US economy.

The US Dollar Index tracks the performance of the greenback against other entities in the basket of currencies. This week it is down by 0.4% to 90.562.