Pound Sterling rises on Brexit trade deal and coronavirus vaccine hopes

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Sterling extended earlier gains against the US dollar, trading last up 0.7 percent on the day at $ 1.3257, having touched a two-month high of $ 1.3269 this morning. Money markets have pushed back expectations UK interest rates will turn negative, to June 2021 from May.

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It comes as appetite for buying riskier assets grew after Pfizer and BioNTech announced a promising coronavirus vaccine on Monday, coupled with expectations that the UK will manage to clinch a deal with the European Union by the end of the year.

Stephen Innes, chief global market Strategist at Axi said: ”A vaccine could make the biggest difference to the economic outlook for those countries that have struggled the most, especially with large services sectors like the UK.”

The pound at 11.30am was trading at 88.94 pence against the euro, having hit earlier a fresh two-month high of 88.85 pence, 1 percent stronger on the day.

A rise above 88.66 pence pushes the currency to a five-month high.

Pound Sterling rises on Brexit trade deal and coronavirus vaccine hopes

Pound Sterling rises on Brexit trade deal and coronavirus vaccine hopes (Image: Getty)

Pound Sterling rises on Brexit trade deal and coronavirus vaccine hopes

The pound at 11.30am was trading at 88.94 pence against the euro, a five-month high (Image: Getty)

Echoing comments by Prime Minister Boris Johnson, Chancellor Rishi Sunak said on Monday Britain and the EU have made significant progress in talks about a post-Brexit trade agreement and a deal can be done.

He also said that the Government was unilaterally setting out how it would let European Union financial services operate in Britain after a post-Brexit transition period ends on December 31.

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An obstacle that might prevent the EU from signing off on a deal and possibly put off the US president-elect, Joe Biden – the Internal Market Bill – was taken off the table after Mr Johnson suffered a heavy defeat in parliament’s upper chamber on Monday.

The proposed laws would have allowed Mr Johnson to breach Britain’s EU exit treaty – a plan that has been criticised by Mr Biden.

READ MORE: Special relationship BACK ON! Biden phones Boris ahead of France

Pound Sterling rises on Brexit trade deal and coronavirus vaccine hopes

Chancellor Rishi Sunak said on Monday Britain and the EU have made significant progress in talks (Image: Getty)

However the Prime Minister has vowed to push ahead with the Bill despite last night’s set back.

A Government spokesperson said: “We are disappointed that the House of Lords has voted to remove clauses from the UK Internal Market Bill, which was backed in the House of Commons by 340 votes to 256 and delivers on a clear Conservative manifesto commitment.

“We will re-table these clauses when the Bill returns to the Commons.

“We’ve been consistently clear that the clauses represent a legal safety net to protect the integrity of the UK’s internal market and the huge gains of the peace process.

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Pound Sterling rises on Brexit trade deal and coronavirus vaccine hopes

Prime Minister Boris Johnson attends weekly Cabinet meeting at the Foreign Office on November 10 (Image: Getty)

Pound Sterling rises on Brexit trade deal and coronavirus vaccine hopes

EU Chief Negotiator Michel Barnier returns to his hotel following morning talks on November 10, (Image: Getty)

“We expect the House of Lords to recognise that we have an obligation to the people of Northern Ireland to make sure they continue to have unfettered access to the UK under all circumstances.”

EU chief negotiator Michel Barnier was in London on Monday to resume trade talks with his UK counterpart Lord Frost.

Mr Barnier tweeted he was “happy to be back” in the capital, with the two teams “redoubling our efforts” for an agreement.

He listed the three major sticking points – governance, the level playing field and fishing policies – as the three “keys to unlock a deal”.

Environment Secretary George Eustice indicated the UK could agree to a possible compromise on fisheries, which has been a major point of contention delaying progress on a deal.

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