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The British pound reaffirmed this morning after three days of declines as France lifted a partial border blockade aimed at halting the spread of a new, rapidly spreading Covid-19 strain.
Hopes for a post-Brexit trade deal are also rising despite disappointing comments from both sides.
Just eight days before the UK leaves the EU orbit, no trade deal has yet been sealed, although a number of conflicting signals indicate, in various ways, that a deal is imminent or that talks have a lot to do with it. do.
The pound has also been hit this week by the imposition of new stringent closures in Britain to combat the new strain of the virus and the decision of many countries to interrupt travel and the transport of goods from the United Kingdom.
However, the lifting of the blockade by France will finally allow trucks stranded at the border to start leaving Britain.
“Supply chain restrictions between the UK and France seem to be back in play soon, as the market remains increasingly convinced of a deal with just the fishing hurdle, all of which is boosting the British pound. on the upside across the board, “said Neil Jones, head of forex sales at Mizuho.
But he predicted that volatility would remain high due to continued uncertainty about the Brexit outcome.
The pound was up 0.3% against the dollar at $ 1.3420 this morning, from a previous high of $ 1.3442, although it had fallen to $ 1.3190 yesterday.
Against the euro, it was up 0.2% to 90.82 pence.
Britain and the EU have repeatedly said they are optimistic that a deal could be reached in time, although the UK’s latest offer to share fishing from British waters was deemed “totally unacceptable” by the chief negotiator of the EU, Michel Barnier.
A British minister also said there were unsolved problems.
Meanwhile, Brexit uncertainty coupled with damaging virus-linked closings will continue to weigh on the pound, especially if the inability to close a trade deal forces the Bank of England to cut interest rates below zero.
The British government is ready to review whether it needs to impose its stricter Covid-19 restrictions on more of the country today, as the highly infectious variant continues to spread.
The Confederation of British Industry today called for more government support for businesses, pointing to the deepening decline in business activity after coronavirus restrictions were tightened last month.
A motor industry body also said UK car production fell further last month, meaning production is down nearly a third so far this year.
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