European session review: GBP weakens amid Brexit-related uncertainty and prospects of tougher coronavirus lockdowns

GBP fell against most other major currencies  in the European session on Thursday as investors were looking for Brexit headlines as the EU leaders are set to meet in Brussels later in the day for a two-day summit, at which they will assess the prospects for a breakthrough in the trade negotiations with the UK. According to the media, the EU leaders will agree to extend the talks with the UK and to hold an emergency Brexit summit in mid-November.

The deputy political editor of Sky News, Sam Coates, tweeted that the UK's Brexit negotiating team is back from Brussels and its chief David Frost set to talk to PM Boris Johnson later today about whether negotiation should continue or there's no point and they should move to planning for no trade deal. "Spirits don't feel sky-high amongst those closest to the talks, " he added.

The UK’s PM Boris Johnson expressed disappointment over the lack of progress in talks on Wednesday, following a phone call between him and the presidents of the European Commission and European Council.

Meanwhile, Ireland's PM Micheal Martin said today that the EU and the UK can still reach a deal within the timeframe available to them. 

Market participants also worried about the rising number of positive coronavirus tests and imposition of stricter restrictions. The UK's health minister announced that London will be moved into tier two of its three-tier lockdown system as cases in the UK's capital continue growing. The switch to tier two will come into effect at 00:01 Saturday.

Investors also digested the latest credit survey from the Bank of England (BoE), which showed an increase in the availability of secured credit between June and August. Meanwhile, availability of unsecured credit declined and is expected to decrease again in the fourth quarter.