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  • GBP/JPY remains bid and approaches 140.00
  • Pound surges on COVID-19 vaccine and hopes of a Brexit deal.
  • Risk appetite sends the safe-haven yen tumbling.

The sterling has continued marching higher against the Japanese yen on Tuesday and appreciates 2.75% so far this week. Optimism about a COVID-19 vaccine and hopes of an imminent Brexit deal have boosted demand for the GBP.

Yen sinks on a risk-on market

The pound surged nearly 300 pips on Monday after the drugmaker Pfizer announced that the tests of their coronavirus vaccine reveal that it is 90% effective which boosted hopes of an effective cure for the pandemic.

This news has had a strong impact on the GBP in terms of the positive effect that it might have for the UK, a service-based economy that has been damaged by the highest numbers coronavirus infections in Europe.

The risk appetite sent equity markets surging on Monday with European indexes posting advances between 4% and 8% and pushed long-term US Treasury bond yields to pre-pandemic highs. The risk-on market undermined safe-haven demand and sent the Japanese yen tumbling.

Market sentiment has remained moderately upbeat on Tuesday, fuelled by speculation about an imminent Brexit deal. UK officials have suggested that the parties might have brought positions closer, which feeds hopes of a last-minute agreement to skip an unorderly exit from the Union.