Happy New Year
Reminders flooded in yesterday from Chief Medical and Scientific Officers, Cabinet Ministers and the Prime Minister himself that New Years Eve will grant the opportunity for most of the United Kingdom for quiet and isolated celebration only. GBP was resilient despite some choppy and illiquid trading conditions as markets hoped that the readings of the Future Relationship Bill and briefings from Downing Street and the Dispatch Box surrounding Coronavirus would not dent risk conditions and Sterling forecasts too much. Ultimately it was the news that the vaccine created between Oxford University and Astra Zeneca had been approved for use in the UK that provided the defining upward momentum for GBP yesterday.
The approval created optimism in the Pound for two reasons. Firstly, it bolster’s the UK’s ammunition against the novel Coronavirus with respect to vaccination. De facto, the approval in the UK yesterday broadens the supply of inoculative doses available to the UK public hopefully, although far from certainly, ushering in a faster rollout of the vaccine. Secondly, as the result of collaboration between two UK entities, this specific vaccine also manifests as a potential UK export, the total value of which is non-negligible to the UK’s current account. Potentially real money flows therefore contributed to the demand for Sterling during yesterday’s trading session. Of course, the UK is the first nation to approve the vaccine manufactured by Astra Zeneca but the approval is presumed to be the first in the line of many.
Ultimately the Future Relationship Bill passed through the Commons smoothly ready for royal assent yesterday evening. On standby in Windsor Castle the Queen gave official assent to the Brexit trade deal meaning that it will be UK law from tomorrow. Condemnation from Westminster’s minor parties including the SNP failed to block the Bill with the Ayes to the Right grabbing 521 votes to 73. The reminder of the sparsity of provisions for services was unwelcome from the Pound’s perspective but the passing of the deal will provide for a better economic forecasts in years to come than might have been presumed under a no-deal.
Discussion and Analysis by Charles Porter
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