European session review: GBP retreats as outcome of UK-EU trade talks still remains uncertain

GBP fell against its major rivals in the European session on Friday as the outcome of the UK-EU talks on a post-Brexit trade deal remained uncertain. 

The UK and the EU's trade negotiators are still trying to finalize the post-Brexit trade deal. However, the stumbling blocks to an agreement still remain. The media reported that the EU's chief negotiator Michel Barnier told EU envoys he cannot say at this stage if a deal with the UK is possible. Barnier announced he will be traveling to London this evening to continue talks, as he and his team are no longer in quarantine. He also acknowledged that "same significant divergences persist". Meanwhile, the UK's Prime Minister Boris Johnson noted that substantial and important differences remain to be bridged in negotiations with the EU and added that the UK can prosper mightily with or without the trade deal. The UK's chief Brexit negotiator David Frost tweeted that for a deal to be possible it must fully respect the UK's sovereignty. "That is not just a word - it has practical consequences. That includes: controlling our borders; deciding ourselves on a robust and principled subsidy control system; and controlling our fishing waters," he wrote.

Renewed talk of a Scottish independence referendum added to pressure on the pound. Scottish leader Nicola Sturgeon said she wants a second referendum on Scottish independence to take place in the "earlier part" of the next parliamentary term, which begins next year. The first independence referendum was held in 2014, when 55% of Scots rejected leaving the UK.

Meanwhile, the reports about a mistake in trials of AstraZeneca (AZN) and Oxford University's coronavirus vaccine candidate weighed on market sentiment. The companies acknowledged that an error in the dosage was made in testing the coronavirus vaccine, developed by them. This raised questions about the reliability of the promising results of the trials that were released at the beginning of the week. On Monday, AstraZeneca and the University of Oxford announced that their coronavirus vaccine candidate appeared to be either 90 percent or 62 percent effective, depending on dosing regimens. On average, vaccine efficacy was 70 percent. AstraZeneca’s executives said that the company wanted the new test to confirm the 90 percent efficacy rate.