British pound slips under multi-year excessive after Brexit deal | Brexit Information

Investors say the UK-EU trade deal is facing the UK with a lot of economic uncertainty. A stalled U.S. COVID-19 relief bill in Congress is also keeping investors nervous.

The British pound hovered below a two and a half year high on Friday after the UK and European Union signed a tightly focused Brexit trade deal, while general sentiment in forex markets was tempered by stalled economic relief from the U.S. coronavirus package .

The UK signed the Brexit trade deal with the EU just seven days before leaving the world’s largest trade bloc.

The pound sterling was last at $ 1.3549 after failing to break the two and a half year high of $ 1.3625 it hit last week. Against the euro, the pound hit 89.80 pence to the euro after hitting a three-week high of 89.54 on Thursday.

The British currency also hit a three-and-a-half month high of 141.06 yen before dropping to 140.22 against the Japanese currency, although trading was slow as many financial markets were closed for Christmas.

Among the few major stock markets that traded on Christmas Day, the Japanese Nikkei 225 index was largely stable, falling just 0.02 percent to 26,662.34 in morning trading. The wider Topix rose 0.08 percent to 1,775.74.

While the Brexit deal will preserve Britain’s zero tariff and zero quota access to the bloc’s internal market and avoid an economically damaging “no deal” exit, it does not cover the country’s much larger and more influential financial sector. And Brussels has not yet made a decision on whether to give Britain access to the bloc’s financial markets.

‘Just the beginning’

“It is important to realize that this is just the beginning of a new trading relationship to build on,” wrote Gavin Friend, Senior Market Strategist at National Australia Bank in London.

“We also have to be ready for both sides to turn the business around in their own way, designed for domestic consumption. Without exception, the national press will speak of “victories” against the other side. “

While the deal was a relief for market participants, the UK is far less releasing the UK from the EU, analysts say. This suggests that UK assets could stay below their global counterparts for some time after their slump following the 2016 referendum that led to the decision to leave the bloc.

[Bloomberg]“Now that the deal is final, we will see the first economic effects of leaving the EU over time. And I think that is clearly negative for the UK economy, ”said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

“I would think the pound will slide after all of the positive things about a deal have been priced in,” he added.

In the short term, the UK economy is also hampering the spread of COVID-19 cases in England, with one in 85 people infected as a new, contagious strain of virus in the south-east of the country in the past week.

Dollar is stuck

The U.S. dollar was constrained in a tight range as a stalemate on a $ 2.3 trillion coronavirus persisted in Washington, increasing the prospect of a partial government shutdown.

Republicans and Democrats in the U.S. House of Representatives have blocked attempts to change the coronavirus aid and government spending package, questioning his status after President Donald Trump called for sweeping changes to the law.

After months of political controversy, the U.S. Congress on Monday overwhelmingly approved a $ 892 billion coronavirus support bill that includes a one-time payment of $ 600 to individuals to help them cope with a pandemic-ravaged U.S. -Economy to help.

The dollar was trading at 103.55 yen for the day, down 0.2 percent, while the euro was almost unchanged at $ 1.2188.

The dollar index – a measure of the value of the greenback against a basket of major global currencies – stood at 90.285 after hitting a two and a half year low of 89.723 last week.

The Chinese offshore yuan was barely changed at 6.5185 per dollar.

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