Sterling rises on Brexit, vaccine hopes; ignores record redundancies

Wads of British pound banknotes are stacked in piles at the GSA Austria company's headquarters in Vienna July 22, 2013. — Reuters pic
Wads of British pound banknotes are stacked in piles at the GSA Austria company's headquarters in Vienna July 22, 2013. — Reuters pic

LONDON, Nov 10 — The British pound got a boost from renewed Brexit hopes and investor risk sentiment today, ignoring the fact that British employers made a record number of staff redundant in the third quarter.

Appetite for buying riskier assets grew after Pfizer and BioNTech announced a promising coronavirus vaccine yesterday, coupled with expectations that the UK will manage to clinch a deal with the European Union by the end of the year. The pound rose to a two-month high of US$1.3222.

Money markets have pushed back expectations UK interest rates will turn negative, to June 2021 from May.

“A vaccine could make the biggest difference to the economic outlook for those countries that have struggled the most, especially with large services sectors like the UK,” said Stephen Innes, chief global market Strategist at Axi.

Sterling was last trading up 0.4 per cent at US$1.3211, and up 0.1 per cent against the euro at 89.62 pence, close to a two-month high.

Echoing comments by Prime Minister Boris Johnson, British finance minister Rishi Sunak said on Monday that Britain and the EU have made significant progress in talks about a post-Brexit trade agreement and a deal can be done.

He also said that the government was unilaterally setting out how it would let European Union financial services operate in Britain after a post-Brexit transition period ends on December 31.

An obstacle that might prevented the EU from signing off on a deal and possibly put off the US president-elect, Joe Biden — the Internal Market Bill — was taken off the table after Johnson suffered a heavy defeat in parliament’s upper chamber on Monday.

The proposed laws would have allowed Johnson to breach Britain’s EU exit treaty — a plan that has been criticised by Biden. — Reuters

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