The Brexit deal is still in the making. With less than two weeks to the year-end, the fishery remains the main obstacle to strike the deal between the EU and the United Kingdom.
Consequently, the pound experiences the strongest sell-off in a risk rout triggered by the discovery of a new COVID-19 variant and introduction of new restrictions in Europe.
Risk assets and currencies start the week on the back foot. The EUR/USD pair drops below 1.22 mark. The GBP/USD exchange rate sinks almost 2% and trades below the 1.33 handle. The Norwegian krone and Russian ruble sell off as oil benchmarks decline over 3% due to new curbs on mobility.
Equity markets sharply turn lower as well. In the EM space, the Polish zloty is fragile as it was on Friday, the local central bank decided to intervene on the market to stop the zloty’s advance in a shocking move. The EUR/PLN pair skyrocketed above 4.50.
Risk markets gain no relief from headlines pointing to immediate ratification of a long-discussed fiscal deal. Nonetheless, the US assets should prove to be more resilient in the face of a new wave of turbulence.
Conotoxia research team