EUR/GBP consolidates in anticipation of the next catalyst

• Coronavirus spread and Brexit talks dragging on are a dead weight for sterling bulls. 
• Bank of England will be in focus for the week ahead.

EUR/GBP is currently trading at 0.8977 between a range of 0.8955 and a 0.8995, consolidating at the start of the week.

It is a stalemate between the UK and Europe on the coronavirus front as the spread and economic impact on the nations are equally as problematic for both the currencies. 

''By the end of next week, the major European economies that went into lockdown in Nov should have a better idea of whether case numbers are coming down quickly enough that they'll actually be able to leave lockdown in December,'' analysts at TD Securities explained.

 ''We would expect at least some countries to extend into Dec, to be extra safe before loosening restrictions for Christmas celebrations.''

Brexit saga caps rallies in the pound

Despite the political upheaval, surging covid case counts, and ongoing Brexit angst, the hopes that Brexit negotiators are on the verge of a breakthrough have helped support the pound. 

The pound has been traditionally the most susceptible to the market sentiment surrounding the outlook.

As it stands, the prospects of a deal have looked slightly improved over the recent weeks, but core issues remain unsolved and the talks are dragging on as deadlines are extended time and time again. 

The time for which ratification of any agreement that can be struck in the 11th-hour is shrinking. 

Britain officially left the EU in January but its status-quo transition period, staying within the EU customs union and single market, will draw to a close on Dec. 31 and nearly 1 trillion dollars in annual trade is at stake.

A senior EU official said on Monday it was getting "terribly late" to seal a new trade deal with Britain.

Ireland's foreign minister said that there would be trouble if a breakthrough was not made in the next 10 days.

On the UK's side, Britain's health secretary Matt Hancock said that the UK's red lines in the negotiations had not changed and Prime Minister Boris Johnson said in a statement that Britain will prosper even without a deal.

However, there is also a sense of calm in markets which are getting used to the roll-back of deadlines. 

While negotiations are expected to be crucial for reaching an agreement, extra time could be 'squeezed out' if the EU and the UK are close to reaching a deal according to various Brexit officials.  

Central bank speakers in focus

Meanwhile, we will hear from the Bank of England and Federal Reserve officials during the week.  

Jonathan Haskel, a member of the Bank of England's Monetary Policy Committee, was slated for a speech today but so far there has been no word.

Instead, markets will wait to hear from Deputy Governor for Markets and Banking, Dave Ramsden, and the Old Lady's governor, Andrew Baily later this week. 

Last week, Bailey explained that the BoE is not looking at implementing a yield curve control policy (as currently being seen in Australia and Japan) and he said that Gross Domestic Product is coming in broadly in line with the bank’s expectations. 

However, markets will be looking for something more definitive as to just when the bank would be concluding its review and preference on negative interest rates.