Sterling edged up in early London trading on Monday after reaching a nineweek high versus the dollar overnight, as Democrat Joe Bidens victory in the U.S. presidential elections saw global markets at new highs and riskier currencies gaining.
Global equities rose and the dollar fell to a 10week low overnight as investors turned optimistic that a Biden presidency would result in a bigger fiscal stimulus package for the United States and calmer global trade.
The pound rose overnight but erased some gains early London trading as the dollar recovered, while investors focussed on a new round of Brexit negotiations.
The United Kingdom left the European Union in January, but the two sides are trying to clinch a trade deal before the statusquo transition period ends on Dec. 31.
ING FX strategists wrote in a note to clients that they expect a deal to be reached.
We therefore lean in favour of a GBPpositive outcome, although the lack of shortterm riskpremia or netshort positioning in GBP both highlight lingering complacency to nodeal risk and a magnified downside risk if negotiations collapse, they wrote.
At 0913 GMT, the pound was slightly up versus the dollar at 1.3158. Versus the euro, it was up around 0.1 at 90.290 pence.
Over the weekend, Britain and the EU both said that key differences remain in negotiations. British Prime Minister Boris Johnson, however, later said that he could see the broad outlines of a deal.
Britain said on Monday it was open to sensible…