Global Reach is becoming Corpay Cross Border, part of FLEETCOR, to broaden our client offering. Please contact our team for further information. 

The final straw

The UK is in serious trouble heading into the Christmas holiday. Not only have we discovered a new, more infectious strain of coronavirus which is causing severe reactions from our trading partners, Brexit continues to grind towards the no-deal mess that we all feared. The US for their part have managed to bridge the yawning bipartisan divide and pass a $900bn coronavirus relief stimulus package that will extend unemployment benefits and small business support for several months. So, while market apprehension about US politics and economics has lessened, the new strain of coronavirus is the larger factor in markets at the moment. This is resulting in Sterling depreciation and a USD rally.

The UK was first off the block with vaccine approval, but much of that lead has been squandered with poorly communicated, turn-on-a-penny government guidelines. Having gone from ‘Christmas is on’ to a state of near-complete lockdown within a span of days is not only confusing but makes it difficult for families and business to plan around the holidays. When the new strain of the virus was announced, at least 10 EU member states banned travel to the UK and France tabled a 48-hour ban on commercial shipping. Once you add angst over Brexit negotiations that failed to conclude at the weekend–we’ve lost count of which deadline this is now–and continue today, the potential for massive disruptions in January are limitless. 

Bottom line: With very little data leading into the Christmas holiday and the prospect of UK disruptions increasing on numerous fronts, the Pound is understandably on the back foot. Approval of the US stimulus package also adds support for US assets, which are reaping the benefit of the UK’s latest setback. The revelation of a new coronavirus strain is adding a broader risk aversion to markets, where we have seen oil pairing gains above $50 per barrel from the last few weeks. Our view is that only a UK-EU trade deal will provide reprieve from GBP depreciation before January.  Most market participants will be looking to reduce positions before the holiday, with the UK not inspiring much confidence at the moment. There is a line of thinking that says Boris Johnson must accept a deal before year end. However, if 2020 has proved anything, it's that all assumptions about rational behaviour need to be reconsidered.

The week ahead


Sterling heads into this shortened holiday week susceptible to large swings in either direction once again, as Brexit negotiators fight to break the deadlock in talks over a UK-EU free trade agreement. Between Monday and Thursday, Sterling moved almost 2.5% higher against the US Dollar and around 2% higher against a basket of its peers, as it was looking more likely that Brexit negotiations would ultimately prove successful. Unfortunately for those bullish on the Pound, Sterling has proceeded to give back all those gains late-Friday through to Monday morning. Fisheries remain the last notable sticking point in UK-EU talks and a breakthrough might see the Pound trade back through last week’s high, up towards the $1.40 handle against the Greenback.

  • On Monday, CBI Realised Sales are forecast to turn positive from -25 last month to 3 this month. The increase in sales volume is used as a leading indicator for future UK retail sales.
  • Tuesday will see the last of the UK data for the week, with Final q/q GDP for Q3 2020 predicted to read unchanged at 15.5%.
  • Also, on Tuesday, Public Sector Net Borrowing figures for November are expected to worsen from 21.6B to 26.3B.


Net flows out of the US Dollar have benefitted the common currency since the beginning of December and last week was a broad continuation of this theme. The ECB have made it clear that they do not want the Euro to sit atop the 1.20 handle against the Greenback, but for now, are powerless to bring the Euro back down to a more competitive level. We have seen a slight move towards risk-off to begin the week, with the Euro giving back around 0.75% of last week’s gains. This might be attributed to a new strain of coronavirus emanating from the UK and/or the perilous state of UK-EU negotiations.

  • On Monday, Eurozone Consumer Confidence index data is due to remain well into pessimistic territory, with the figure for December remaining unchanged at -18.
  • The German Gfk Consumer Climate index is predicted to fall from -6.7 to -8.7 on Tuesday. This dip in confidence might impact consumer spending over the coming month.



The Dollar index has continued to tick lower throughout December as the emergence of coronavirus vaccinations boosted investor sentiment to move back into riskier assets and out of traditional safe-haven currencies. Since March, the US Dollar Index is around 12.5% lower, hovering around two and a half year lows. We see potential for the Greenback to slide even further in Q1 of 2021 if prevalent geo-political issues manage to come to a positive end. Notably, the US has just passed a $900bn package of fiscal aid in response to the ongoing pandemic and this, combined with vaccine optimism, will likely drive further optimism for global growth for the coming year.

  • On Tuesday, the US will release their Final Q3 2020 GDP figure, which is expected to remain at 33.1%.
  • On Wednesday, the Fed’s preferred method of measuring inflation will be released. The Core PCE Price Index m/m is forecast for a minor increase from 0.0% to 0.1% in November.
  • Durable and Core Durable Goods Orders for November are also due out Wednesday. Core goods orders are predicted to fall from 1.3% down to 0.5%, whilst overall orders are expected to fall to 0.6% from 1.3% previously.


Over the Christmas period, our opening hours are changing. On 24th December we will be open from 8am – 2pm, and from 29th – 31st December from 9am – 4pm. If you'd like to discuss your foreign exchange requirements with one of our currency specialists, call us on +44 (0)20 3465 8200.