Brexit Deal Optimism Drives Pound Higher

GBP

The British pound raced higher against other counterparts amid growing optimism over a trade deal between the United Kingdom and the European Union. After many rounds of negotiations, it seems that both ends were able to compromise for the sake of striking a deal. It is not official yet, but there were some positive headlines from officials familiar with the matter. The market is cheering this development but would prefer more clarity. The GBPUSD rallied to $1.3571, and the EURGBP declined below 0.9000 again.

USD

The dollar index, which measures the dollar performance against a basket of the world's major currencies, weakened further to 90.15, as Brexit deal optimism drove investors towards European currencies. The euro and pound account for almost 70% of the US dollar index basket. Moreover, some economic indicators such as the personal spending and PCE Price Index signaled a possible slowdown in the US economic activity. The EURUSD held steady above $1.22, and the AUDUSD edged higher to $0.7595.

Equities

Major US stock benchmarks ticked higher during the US session as investors anticipate whether congress will adjust the covid19 relief bill. President Donald Trump criticized the stimulus deal and called it unsuitable, asking policymakers to raise direct payments to $2000 from $600. Democrats welcomed his proposal and will try to push forward to a vote on this tonight. The market is optimistic about more money being pumped. The Dow Jones Industrial Average futures rose to 30128, the S&P500 futures rallied to 3690, and Nasdaq futures recovered to 12675, after weak performance yesterday.

Metals

Precious metals price inched higher as the dollar weakened amid growing prospects of adjusting the fiscal stimulus deal. The price of a gold ounce rallied to $1879, the price of a silver ounce advanced to $25.90, while palladium futures held steady near $2330.

Oil

Oil prices edged higher, supported by a drop in inventories and possible modifications of the stimulus deal. The US Energy Information Administration reported a decline of 0.562 million barrels in US crude inventories. On the other hand, adjusting the direct payments from $600 to $2000 would raise spending, which would boost economic activity. However, the new covid19 variant could limit gains if it forced more lockdowns. The West Texas Intermediate crude February delivery rose hovered above $48, and Brent Blend February delivery held above $51.

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