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Sterling Rallies on Vaccine and Brexit Deal Optimism

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Sterling rallied on Monday as more positive news about a potential COVID19 vaccine propelled investors to buy riskier currencies and offset concerns about whether Britain and the European Union can clinch a Brexit trade deal.

London and Brussels this week continue their negotiations to agree a deal on their future trading relationship, though time is now running very short as Britains postBrexit transition period ends in fewer than six weeks.

Without an agreement Britain would revert to trading with the EU on World Trade Organisation rules, an outcome both sides believe would prove highly disruptive for their economies.

Most investors believe a deal will be clinched, even if it is a barebones one that leaves some trade discussions for later.

Such optimism has kept sterling supported and news on Monday that Britains AstraZeneca vaccine for the novel coronavirus could be around 90 effective without any serious side effects added to the positive mood and pushed the pound to 212 months highs.

The British currency rose 0.7 to as high as 1.3382 , while against the euro it rose 0.6 to 88.75 pence, a near twoweek high.

The FX market is seeing it as a GBP positive sign that the negotiations are being continued in December, said Ulrich Leuchtmann, an FX strategist at Commerzbank, while adding that an extension to the Dec. 31 transition period enddate is now likely as the two sides run out of time to forge a deal.

In a busy week for the UK, Finance Minister Rishi Sunak will…

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