Dollar slips, sterling gains after UK, EU strike Brexit trade deal

December 24, 2020

NEW YORK (Dec 24) - The U.S. dollar was mostly lower on Thursday, while sterling gained after Britain and the European Union struck a post-Brexit trade deal, boosting the market’s appetite for risk and raising hopes the United Kingdom can avoid a turbulent economic departure at the end of the year.

Britain clinched a trade deal with the European Union on Thursday, just seven days before it exits one of the world’s biggest trading blocs in its most significant global shift since the loss of empire.

“Deal is done,” a Downing Street source said. “We have taken back control of our money, borders, laws, trade and our fishing waters.”

The EU Commission will hold a press briefing on the trade agreement later on Thursday.

In mid-morning trading, the dollar index was slightly lower at 90.256. So far this year, the dollar has fallen 6.5%, its worst yearly performance since 2017.

Currency markets also seemed to have shrugged off President Donald Trump’s criticism of the fiscal relief package earlier approved in Congress, which could put the bill in limbo.

Republicans and Democrats in the U.S. House of Representatives on Thursday blocked attempts to alter a $2.3 trillion coronavirus aid and government spending package, leaving its status in doubt after Trump demanded extensive changes to the legislation.

Sterling, meanwhile, extended gains and rose as high as $1.3620. It was last up 0.7% at $1.3591, with potential to rise to a 2-1/2 year high above $1.3625.

The pound also rose to a three-week high against the euro at 89.54 pence. EURGBP=D3 and was last up 0.7% at 89.72 pence.


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