Pound Firm Despite Fresh Bump in UK/EU Trade Negotiations

The Great Britain pound was firm today, rising against most of its major rivals, despite a fresh bump on the road to a post-Brexit trade deal between the United Kingdom and the European Union.
The sterling was getting support this week from hopes that the UK and the EU will be able to reach a trade deal before the deadline on December 31. But there are also doubts as some of the EU politicians think Britain demands too many concessions. In particular, France wants for its fishing vessels to retain access to the narrow straight between France and Britain, while the UK wants total control of its waters. Optimism about the trade talks sank on Friday after France said that it could use its power of veto if it remains unsatisfied with the deal. Clément Beaune, France’s Minister of State for European Affairs and a close ally of French president Emmanuel Macron, said today:

This [no deal] risk exists. We mustn’t hide it because there are businesses, our fishermen, citizens who need to know and so we must prepare for a risk of no deal. That’s to say on 31 December there will be no more free circulation, and free access to the UK market and vice versa.

He also noted, though, that he still hopes that an accord is achievable:

But it’s not what we want and the negotiations are still going on with Michel Barnier, who is in London at the moment. I still hope we can have a deal but I also say to our fishermen, to our producers, to our citizens, that we won’t accept a bad deal.

In response, UK politicians accused the EU of bringing new tweaks to the agreement at the latest possible moment, which reduce chances of getting a deal:

At the eleventh hour the EU is bringing new elements into the negotiation. A breakthrough is still possible in the next few days but that prospect is receding.

On the data front, the seasonally adjusted IHS Markit/CIPS UK Construction PMI climbed to 54.7 in November from 53.1 in October. The report commented on the result:

The latest reading pointed to a solid increase in total construction output, although the rate of growth remained softer than the peak seen in July.

GBP/USD rose from 1.3440 to 1.3479 as of 12:21 GMT today. GBP/JPY gained from 139.64 to 140.12. EUR/GBP rallied from 0.9028 to 0.9067 intraday but has retreated to trade close to its opening level by the time of writing.
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