The pound to euro exchange rate was trading near 1.1000 on Wednesday after trades continued to buy into a Brexit deal outcome. The pound shook off a higher unemployment rate and the move towards strict lockdowns in London to move higher versus the euro.
If the Brexit negotiations do lead to a deal then there will be a tight deadline available to ratify the agreement.
Bloomberg Asks if a Christmas Day Vote is Possible
Bloomberg has written about the prospects for a Brexit deal and suggested that a Christmas vote is a possibility.
The negotiations are still ongoing between the UK and European Union but there are only 16 days left to see the deal made, before then being approved by politicians and EU countries. Prime Minister Boris Johnson has promised to allow politicians a vote and hasn’t ruled out the potential for a vote on There’s also a chance that the deal could be scuppered by a last-minute intervention by EU leaders if they are unhappy with the terms.
The situation is the same in the EU where all 27 countries will have to agree on the deal before a vote by the 705-seat assembly. This could also happen in a special session around Christmas.
Inflation and Purchasing Manager’s Index (PMI) data will lead the pound euro before Federal Reserve rates.
Today saw the release of inflation for the U.K. economy and the numbers have fallen again due to cheaper clothing and food prices. The Office for National Statistics (ONS) reported that the Consumer Price Index (CPI) number decreased to 0.3% in November after seeing 0.7% in the previous month.
Wednesday morning also sees the release of services and manufacturing PMI data for the UK, EU and German economies. The manufacturing figure is more important to the German economy, while the UK economy is 80% comprised of services such as financial services, tourism, and entertainment. Readings above 50 are seen as being expansionary and the German manufacturing number has been strong with expectations for 56.4, while UK services are expectedly surfing the 50 line with a prediction for 50.5 due to the hit on tourism and hospitality.
The stock market may see low volatility during the European and U.S. trading session as investors await a Federal Reserve interest rate decision at 20:00. The central bank is unlikely to touch rates but there is potential for a stimulus increase to counter the stalemate on government stimulus and that would drive risk assets for the rest of the week.
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