The EUR/GBP pair plummeted below 0.9000 levels, from a high of 0.9078 Wednesday, as optimism increased over post-Brexit trade discussions. Investors believe that the meeting between the UK Prime Minister Johnson and the EU Commission chief Van der Leyen will break the impasse. The roll out of Covid-19 vaccine in the UK also aided the pound’s rally.
Negotiators from both camps have been trying to sort out misunderstandings over fisheries, state assistance for enterprises and framework for addressing issues, and prevent chaos on the border regions after the end of this month.
Notably, the EU Commission Vice-President Maros Sefcovic and top UK cabinet minister Michael Gove inked an “agreement in principle on all issues” on the enforcement of the Brexit pullback agreement, including the guidelines for Ireland and Northern Ireland.
With respect to economic data, Germany’s trade surplus narrowed mildly to €19.40 billion in October 2020, from €21.30 billion last year. Exports contracted 6.50 percent on y-o-y basis to €112 billion, the eighth successive yearly drop and imports declined 5.9% to €92.70 billion, the 10th successive decrease. Exports to the Eurozone fell 5.1% and those to the UK declined 11.7%.
Sales to the US, which was specifically affected in a worse manner by Covid-19 pandemic, declined 10.5% while sales to China inched up 0.3%. Imports to the Eurozone fell 2.9% and particularly from the UK declined 14.7%.
Imports from China plunged 3.30%, while from the US and the UK at 18.8% and 17.6%, respectively. On a seasonally adjusted basis, exports declined 6.8%, while imports fell by 5.2% compared with February, the month before limitations were enforced due to the Covid-19 pandemic.
Furthermore, the country’s statistical organization Destatis reported current account surplus of €22.50 billion in October 2020, slightly greater than €19 billion in the similar period last year.
The services deficit narrowed to €0.20 billion in October, from €0.90 billion. However, primary income gap rose to €7.10 billion, from €6.80 billion. On the contrary, goods surplus narrowed slightly to €20 billion, from €22.60 billion. Secondary income deficit widened to €4.30 billion, from €3.20 billion.
Germany recorded 590 Covid-19 deaths Wednesday, the highest daily rise since the start of pandemic, as the government strives to contain the quick increase in infections, notwithstanding the fact that partial lockdown has been enforced in the country since November.
The economic power house of Europe also witnessed record number of critical Covid-19 patients, increasing worries about the need to enforce additional steps in the forthcoming weeks. Similarly, the UK recorded 599 deaths on Tuesday, while France and Italy reported 831 and 634 loss of lives, respectively.
