30/11 – Clarity absent on Brexit

Jeremy Thomson-Cook
Jeremy Thomson-Cook 30 November 2020

GBP: Brexit passage still unclear

EUR: Within touching distance of a new year’s high

USD: Rebalancing risks remain


Brexit remains very much up in the air this morning with neither UK or EU leaders prepared to offer an idea as to when a deal may be concluded, if at all. Reports suggest that a call between EU President Von der Leyen and UK PM Johnson has not been arranged as yet and therefore, if there is news, that it will come towards the end of the week.

Sterling may be supported this morning courtesy of data supporting the recent lockdown following a 30% fall in infections compared to the week before we all started staying at home again. While this is obviously good news, sterling will react stronger to positive vaccine news.

This week’s data calendar is quiet with sentiment surveys for November due that will point to little more than the fact that we were all in lockdown.

Once again, it will be political headlines that allow sterling to charge one way or another this week.


The single currency is within a whisker of breaking the 1.20 again this year, driving higher despite the knowledge that huge hurdles remain on both the EU budget and the Brexit negotiations.

It feels like this is a market wanting to test the ECB before its meeting next week; just how far can they push the EUR before the central bank decides to say enough is enough?

US dollar

Rebalancing risks remain for the US dollar this morning as we head into the last day of November. As we head into the last days of any month portfolio managers will have set benchmarks for how much of their investments need to be hedged for currency movements and, as the value of their assets within their portfolio changes over the course of the month, portfolio managers will need to re-hedge their currency exposure, so that their currency benchmarks are maintained.

We saw some of these moves pre-Thanksgiving last week but expect more today.

The wider investment atmosphere at the moment is allowing the USD to hold at current levels, with rising Covid-19 infection rates in the US and stimulus measures in doubt not helping sentiment this morning.

USD has not reacted to the news that President-elect Biden injured his ankle in a fall yesterday.


The AUD is back in focus this week with the latest Reserve Bank of Australia’s meeting due overnight tonight. Naturally no change in policy is expected following the $100bn increase in QE last month and if the commentary from the RBA is optimistic then we could easily see this recent run of AUD strength extend. A risk to this would be a focus from the central bank on the increasing trade tensions between Australia and China.

Have a great day.