Another week of procrastination with regards to UK/EU trade talks, with news continuing to ebb and flow between positive and negative rhetoric. Brexit talks are set to resume on a face-to-face basis as they enter what has been widely described again as a crucial week. EU chief negotiator Barnier is reported to have had a briefing with EU fishery ministers on Friday, which has prompted speculation that a compromise on a key area of contention is imminent. However, there was no official confirmation from either side over the weekend, with both highlighting this as a sticking point. Some analysts are saying that a deal must be done next week to allow time for votes in the UK and European parliaments before year-end. However, there are reports that suggest that preparations are being made for emergency voting sessions post-Christmas which could warrant more time. In the meantime, question marks over the UK fundamental picture remain fragile. The services sector declined to 45.8 from 52.3 previously, showing that the sector contracted. This also stated that unemployment continued to decline sharply, although overall business confidence strengthened to the highest level for over five years amid optimism over vaccine developments. In addition, Bank of England chief economist Haldane noted optimism over a recovery in the economy for 2021, although he also warned that there would be permanent scarring present. Chancellor Sunak, in his spending review stated that the economic emergency had only just begun and there would need to be a further £55bn in

Last week FX markets were held in a holding pattern as overarching themes failed to deliver any further clarity. President Trump continues to challenge the result of the election and hinder President Elect Biden’s transition to power. This continues to drag on but is having very little impact on the FX market. In the meantime, the US Dollar made gains on a risk aversion move as new COVID cases in the nation escalated to a new record high of almost 200,000 in a single day. The escalation forced New York to close its schools. There has been positive news surrounding a COVID vaccine; Pfizer upgraded its assessment of the effectiveness of its vaccine to 95%, almost matching the Moderna product, while the University of Oxford/AstraZeneca vaccine also reported promising results in phase-two trials. However, question marks remain about the timing of both the vaccines being signed off and the subsequent roll out. Sterling continued to trade within its ranges and fluctuated on UK/EU trade talk  developments. News remains mixed, depending on what news source you decide to read. There were source reports that a Brexit trade deal could be reached by early as this week, although there was still a high degree of uncertainty around the outlook. However, reports from the EU suggested that several members had asked to European Commission (EC) to publish it’s “no deal” contingency measures as difficulties remain. On Thursday, Brexit trade talks had been halted due to a positive Coronavirus case for one of EU

Last week market sentiment was jumping around amidst global events, in large from the US. Firstly, newswire saw Joe Biden and his running mate, Kamala Harris, declared as winners of the US Presidential election, pending legal challenges from the Trump camp; these are still ongoing. However, the big shift in investor sentiment was driven by the news of a COVID vaccine. German company BioNTech and the US pharmaceutical giant Pfizer announced via a press release on Monday that their jointly developed vaccine candidate had outperformed expectations in the crucial phase 3 trials, proving 90% effective in stopping people from falling ill. This resulted in equity and oil markets pushing significantly higher whilst the US Dollar weakened as a result. As the week progressed investor sentiment tapered as the market continued to decipher and articulate how this can be rolled out and what challenges remain. In the meantime, the UK’s economic challenges remain as data disappointed somewhat. The UK jobs data reinforced unease over labour-market trends, especially a sharp increase in redundancies. The headline unemployment rate rose to 4.8% from 4.5%  An extension of the furlough scheme provided an element of relief and Sterling was also protected by optimism that vaccine developments would help provide a key lifeline for the economy. The UK's economy bounced back from recession with record growth of 15.5% in July to September, this was slightly below expectations. Furthermore analysts warned that it was likely to shrink again in the final three months of the year

Last week the main focus was on the US Presidential Election which in the end dragged into the weekend following an unprecedented number of postal votes in particular states. However, over the weekend, Joe Biden and his running mate, Kamala Harris, were declared as the winners of the US Presidential election, pending legal challenges from the Trump camp. The US Dollar weakened on the back of this news, but the news will continue to be monitored for legal challenge developments. The market will continue to analyse the situation but also look at what this means for markets in the long term especially with Brexit trade talks continuing. In the meantime, Sterling received a boost last week as The Bank of England (BoE) expanded its bond-buying program by a bigger-than-expected £150 billion in another round of stimulus to help the economy through a second wave of Coronavirus restrictions. This will start in January and finish by the end of 2021, the BoE said. Officials are ready to step up the pace of purchases if market functioning worsens. Officials led by Governor Andrew Bailey voted unanimously to increase their asset-purchase target to 875 billion Pounds and keep the benchmark interest rate at 0.1%. Officials also slashed their estimates for economic growth, saying they now expected a contraction in the fourth quarter. More positive for Sterling was that there was talks of negative interest rates. In addition, Chancellor Sunak extends furlough out till March 21. Looking to the week ahead, the market