Which deadline are we on now?

Today’s news headlines:

‘Europe’s finance sector hits ‘peak uncertainty’ over Brexit’. Despite its outsized economic importance to London, and therefore to the UK, access to financial markets has largely been excluded from Brexit negotiations. Quite a few firms are banking–no pun intended–on a last-minute amendment to an agreed deal and have made few preparations for a hard Brexit scenario. With the talks stalling and deadlines continually pushed further, the window to address this issue is shrinking daily.

‘Sunak warns of ‘economic emergency’ as borrowing hits record £394bn’. If the Brexit backdrop was not enough to create profound economic uncertainty, the Chancellor just announced that the UK faces an economic emergency due to Covid support and aid. Rishi Sunak revealed that the government might reach a new peacetime borrowing record at £394bn, while an estimated 2.6 million people might be out of work by the second quarter of 2021. This heaps even more pressure on stalling Brexit negotiations. The OBR forecasts that a reversion to WTO terms–in the event of hard Brexit–would hit UK GDP by a further 2% at the start of 2021, which is roughly £44bn based on 2019 nominal GDP.

Today's events, rates, and data 

  • Happy Thanksgiving to our American friends – Canadians, please carry on! Today and tomorrow are likely to be lower volume which could result in greater volatility if we see unexpected headlines, but more subdued otherwise. The data calendar is rather bare heading into the end of this week and month, but there are news headlines aplenty to cause market movements. Over the past week, the trade-weighted Dollar has drifted modestly lower towards the bottom of its two-and-half year trading range, while Brent Crude has staged an impressive rally towards the key 50 Dollar mark.  Despite UK economic woes and disastrous headlines, the Pound is gaining from the risk on trend and approaching its earlier September peak against the Dollar, though the extension of that trend relies heavily upon some good Brexit news.

Today's events

AU Private Capital Expenditure: -3.0% vs -6.4% last month
EU German GfK Consumer Climate: -6.7 vs -3.2 last month
EU European Central Bank Policy Meeting accounts: 12:30PM
US Bank Holiday

Interbank rates

GBP/USD: 1.3365
GBP/EUR: 1.1200
EUR/USD: 1.1930
USD/CAD: 1.3000

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