EUR/USD has surged back above 1.2200 amid risk on/USD weakness triggered by reports a Brexit deal is close. A heavy dump of US data has gone largely unnoticed as a result of Brexit euphoria. GBP has seen significant upside in recent trade as a flurry of speculation emerges that the EU and UK are closing in on a deal on their future relationship that would avoid a chaotic WTO end to the transition period at the end of the year. In terms of the latest Brexit updates, major newswires Reuters and Bloomberg have both been running headlines that a deal is close. Citing an EU Diplomat, Reuters reported that a deal could come as early as today (Wednesday the 23rd of December). EU sources also told Reuters that EU member states had started to prepare the procedure for a provisional application of a new trade deal with the UK as of the 1st of January 2021. In other words, EU leaders are getting ready to quickly (and provisionally) ratify a Brexit deal in the coming days, allowing more time for the European Parliament to confirm this deal in the new year. The positive Brexit news is having a strongly positive impact on the market’s broad appetite for risk; European equities have jumped higher, US and European bond yields are up and crude oil and industrial metals have all advanced while safe-haven currencies USD (and also CHF and JPY) have taken a hit. In this risk on/weaker USD environment (the Dollar Index has fallen to lows of the day in the 90.20s), EUR/USD is of course also doing well. The pair has recently surged back above the 1.2200 level, which had been capping the price action earlier on in the day. EUR/USD now trades with gains of 0.5% on the day or close to 60 pips. Brexit steals the limelight from US data dump A lot of US data has been released so far on Wednesday but has been largely ignored by EUR/USD, which is much more focused on the above noted Brexit news. At 13:30GMT, weekly jobless claims data saw a decent improvement, with initial jobless claims falling back to 803K from 885K last week and continuing jobless claims dropping to 5.337M, both below expectations. This might ease some concerns about the rate at which the US labour market is deteriorating into the year-end, but claims are still persistently higher than they were back in early Q4 2020. Meanwhile, November Core PCE data (the Fed’s favoured measure of inflation) underwhelmed, with the YoY rate staying at 1.4% (the Fed’s target is above temporarily above 2%) and the MoM rate dropped to 0.0% from 0.2% the month before. Meanwhile, November Personal Income and Spending figures were also released, the former, rather discouragingly, showing a MoM drop of 1.1% and the latter a MoM drop of 0.4%. Another batch of data was just released at 15:00GMT; Michigan Consumer Sentiment rose to 80.7 from 76.9 in December but not as much as consensus expectations for a rise to 81.3. Consumer Expectations and Current Conditions also both rose but missed expectations. Meanwhile, New Home Sales collapsed by 100K in December to 841K, a big miss on expectations for a rise to 995K. That amounted to a MoM drop of 11.0%. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next Covid Strain: UK says South African variant is even more transmissible FX Street 2 years EUR/USD has surged back above 1.2200 amid risk on/USD weakness triggered by reports a Brexit deal is close. A heavy dump of US data has gone largely unnoticed as a result of Brexit euphoria. GBP has seen significant upside in recent trade as a flurry of speculation emerges that the EU and UK are closing in on a deal on their future relationship that would avoid a chaotic WTO end to the transition period at the end of the year. 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