Sterling made its loss period against the US dollar even longer on Monday. The situation comes amid growing concerns that British and EU negotiators will fail to reach an agreement before the transition period ends later this month.
The British currency was trading at a price range of $1.3230 during the morning offer. It then declined by 1.5% for the session. It is known that Talks between the UK and the EU are taking place in Brussels some time ago.
However, the two sides remain divided over three complex issues: fisheries, competition rules, and the governance of their potential agreements. It has been hard to find an agreement on these three areas since the start of the summer.
Is a Deal Still Possible?
Media reports over the weekend showed signals of a compromise over fishing rights. However, the EU's chief negotiator Michel Barnier denied this. That was stated at a meeting held on Monday morning. Barnier told EU ambassadors that a deal was still possible to be realized.
Unfortunately, he could not guarantee whether that deal could be reached on Monday. This was revealed by trusted EU sources. The source who provided the information to CNBC did not want to be named because the talks are highly sensitive.
It is previously known that the UK left the EU last January with a few things. The UK did exit the EU, but the country agreed to follow EU trade rules until the end of the year. Therefore, both sides can make new trade arrangements.
However, negotiations have been protracted for months and have even now entered into the end of the transition period. That sparked fears that negotiations could fail without a deal. It is these concerns that then affect various currencies and commodities.
The Release of US Job Data
Ireland's foreign minister, Simon Coveney, told the Irish Times on Sunday that he would not be surprised if the talks failed. It has a high possibility to happen. In that situation, the both exporters may face the higher costs and barriers related to their business.
Elsewhere, the U.S. Dollar also declined due to the country's disappointing jobs data. The data raised expectations about new economic stimulus measures. Pound investors are also monitoring Brexit trade talks. The U.S. index reported a thin fall of 0.03% to 90,767.
For information, the U.S. Dollar reached its lowest level in a two-and-a-half-year period. Meanwhile, the Euro rose to its highest level since April 2018. This happened during Friday's session. U.S. jobs data released on Friday were disappointing.
It showed that manufacturing payrolls increased by 27,000 in November. That figure is lower than the 43,000 forecast by a source and October’s increase of 33,000. Furthermore, Non-farm payrolls grew by 245,000. This figure is much lower than the previous estimate of around 469,000.
The Hope of Stimulus
It is also lower than the October increase of 610,000. The data was the smallest increase calculated since May. The unemployment rate has also declined so far. The decline was about 6.7% or below estimates of about 6.8%.
Data shows that job recovery is slowing because America is still struggling to fight the third wave of coronavirus pandemic. Investors are hopeful about this data. They hope that the release will make it easier to realize the stimulus in that country.
A momentum related to stimulus was happened on Friday. Congress has until December 11 to pass some policies and rules. It means that for about three days from now and many parties really have a high expectation in the future.
Meanwhile, The USD/JPY pair fell 0.08% to 104.06. In the other places, the AUD/USD pair edged up 0.09% to 0.7428. In addition, the NZD/USD pair was also slipped down tightly for about 0.10% to 0.7038 seen from the market data.
