Spreadex Market Update

Sterling sinks on fresh Brexit deadline, Dow Jones awaits FDA vaccine decision



Sterling took little comfort from the announcement of a new – and, this time, likely permanent – Brexit deadline.

Following a dinner diplomatically described as ‘frank’ by Downing Street, and ‘lively and interesting’ by European Commission chief Ursula von der Leyen herself, Boris Johnson’s trip to Brussels failed to yield a Brexit deal.

Instead both sides will reconvene at the negotiating table, aiming to bridge the ‘very large gaps’ that reportedly remain before the end of the weekend.

Wondering, after so many months of talks, where a compromise can come from, the pound sank 0.6% against the dollar, and 0.8% against the euro. Cable is now back at $1.3315, its worst price in a fortnight.

It didn’t help that the UK’s growth slowed from 1.1% in September to 0.4% in October, as new covid-19 restrictions came into play. There was, however, a pair of better than forecast industrial and manufacturing production readings, vastly outperforming expectations at 1.3% and 1.7% respectively.

Despite the pound’s sharp decline, the FTSE could only add 0.2%, keeping it the wrong side of its recent 6,600 9-month peak. This echoed the tone of trading in Europe, where the DAX dipped a handful of points, and the CAC rose 0.2%.

After falling 100 points last night, the Dow Jones is currently set for a quiet start, the futures suggesting a meagre 0.1% rise at the open. But it is a big day in the US – the FDA meet this afternoon to discuss the Pfizer/BioNTech vaccine, which has already been deployed in the UK and approved in Canada. It may seem like a forgone conclusion at this point, but a thumbs up from the FDA could give the Dow Jones a shot in the arm.

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