Brexit suspense, oil and gold steady

Crunch time for Brexit

The pound has rebounded a little today as the UK and EU managed to reach agreement on one contentious issue, the Northern Ireland protocol. The resolution means the clauses that threatened to break international law in the UK Internal Market Bill have been removed, whatever the outcome of the Brexit talks.

Some have viewed this as a good omen for the talks, with relations seemingly improved ahead of crunch talks between the two leaders. The fact that this agreement resolves the issue, deal or no-deal, makes others feel a little less certain. The pound is seeing some reprieve but with nerves clearly now kicking in, I expect plenty more volatility in the coming days and a significant plunge if talks collapse this week.

Oil pares gains after OPEC+ deal

Oil prices continue to pull off their highs in the aftermath of the OPEC+ deal. The deal delivered enough to sustain the moves that occurred in the weeks leading up to the meeting but with the group deciding future output on a month by month basis, there’s plenty of opportunity to accelerate the reversal of cuts should the economy perform better than expected. It will be interesting to see how producers respond in the event that US shale comes back online faster than anticipated, given the sensitivities there.

Gold holding above USD1,850

Gold is having a very different December to November, when it plunged in the aftermath of all the positive vaccine news. While nothing has changed on that front, the yellow metal is once again finding some form and has even broken above USD1,850, as US lawmakers work towards a fiscal deal. I do wonder whether it has enough to sustain these moves though, and think another test of the lows shouldn’t be written off. Of course, the Fed next week may give it another helping hand.

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