Euro Continues to Soar as the British Pound Weakens Amidst Uncertainty

December 07, 2020 13:30

Anyone following financial and economic news cannot have failed to notice the resurgence of news about Brexit, as we approach the deadline for negotiations on UK-EU post-departure trade arrangements.

As one would expect, the effect of this uncertainty has weighed on GBP, which has lost 1% against both the EUR and the USD today – its worst one day performance since September.

The fall against USD comes despite the dollar's struggles against US trade and fiscal deficits, the expectation of accommodative policies from the Fed and a Biden administration - and now, with a vaccine on the horizon, the USD losing much of safe haven flow it gained during the pandemic.

Against a basket of currencies, the dollar has fallen by more than 6% this year.

Depicted: Admiral Markets MetaTrader 5 - EURUSD Daily Chart. Date Range: May 13, 2020, to December 7, 2020. Date Captured: December 7, 2020. Past performance is not necessarily an indication of future performance.

Against this background, the Euro is in a situation where it is rising against its two major rival currencies, a trend the ECB is struggling to contain, as this will hamper European exports. The Euro has gained more than 8% against the USD this year.

All eyes will be on the ECB's rate setting meeting on Thursday.

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