Pound Recovers on Brexit Optimism

GBP

The British pound kicked off the week on a stronger note on Brexit optimism. The United Kingdom and the European Union agreed to extend talks, trying to strike a deal. The announcement eased investors' woes and raised the chances of avoiding a no-deal outcome. However, the sterling could be falling under other pressure with Covid19 cases surging again in the past couple of days. The GBPUSD opened on a gap higher above $1.3350, and the EURGBP dipped to 0.9070.

USD

The dollar index, which measures the performance of the United States dollar against a basket of the World's major currencies, surrendered recent gains, falling again towards 90.70. Investors are looking forward to the congress decision on fiscal stimulus and the Fed's monetary policy meeting mid-week. There are some expectations that the board will decide to add purchases of longer-term bonds to cap yields. The USDCHF fell to 0.8880, and the EURUSD rallied to $1.2140.

Equities

Major US stock-index futures started the week on a stronger note as investors look forward to the congress decision on fiscal stimulus. The Democrats and Republicans could agree on a deal slightly above $900 billion which could support citizens and boost economic activity. On the other hand, the optimism emerging from vaccine distribution is also bolstering risk appetite. The Dow Jones Industrial Average futures rose to 30225, the S&P500 futures rallied to 3681, and Nasdaq futures advanced to 12422.

Metals

Precious metal prices continued to trade in a narrow range awaiting fresh drivers. The vaccine approval and distribution countered the impact of reaching a deal on fiscal stimulus. The price of a gold ounce is trading between $1824-1848, the price of a silver ounce held steady between $23.50-24.10, while palladium futures eased to $2317.

Oil

Oil prices raced higher on excess market optimism. Market participants are assuming that the vaccine rollout will support in return life back to normal and drive oil-demand levels higher. On the other hand, a fire in Iran's second-largest refinery, and a ship explosion in Saudi Arabia boosted the rally. The West Texas Intermediate crude January delivery rose to $47.13, and Brent Blend February delivery edged higher to $50.59, aiming at last week's high of $51.03.

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