Morning Report – Monday 23rd November

Jon Robson, Head of Trading – “Sterling has started this week in the same buoyant tone as it ended last. There are increasing reports suggesting a Brexit deal is close however, we do not expect an announcement this week as previously anticipated.”

Main Headlines

Senior officials are considering relaxing Coronavirus restrictions over the Christmas period, to “save Christmas”. The second lockdown seems to be working as the number of new cases reduces or stagnates across the continent. The UK is contemplating stricter restrictions in the lead up to Christmas to allow a small number of unrestricted days over the festive period.

Rishi Sunak announced on Sunday that the UK would be heading for large tax increases to make up for the significant level of fiscal spending caused by the pandemic.  The UK deficit is on course to hit a peacetime record, and Sunak will assess the damage during Wednesday’s spending review.

GBP

The pound is trading slightly higher against both the euro and dollar this morning. According to reports, the UK could rollout the Pfizer vaccine in less than three weeks, which has led to the pound strengthening, despite potential austerity measures being discussed by the chancellor. Flash PMIs are also released for the UK and will likely show a significant slowdown in economic activity for November when the UK entered lockdown.

EUR

The euro is slightly higher against the dollar in early morning trading today. Similar to the UK, the Eurozone release flash PMIs this morning and will also show a decline in activity. Boris Johnson is set to speak today on Brexit, and apparently is “95% agreed” according to Sky News. Irish Foreign minister, however, doubts that an agreement can be reached in the next 10 days.

USD

The dollar is mostly unchanged against a set of major currencies including the Japanese Yen. US policymakers are getting ready for Thanksgiving on Thursday, where millions of Americans will be travelling across the country, as daily Coronavirus cases near 200,000. If their travel is left unchecked, this could set the US back months as tighter restrictions will need to be put in place.

Markets

Global equities are gaining slightly this morning as news came out that the US are looking to start their vaccine rollout by mid-December. Markets have of late, tried to weigh up the potential optimism of 2021 to the muddy waters of today, and it seems that today, investors are looking to upside. Bond yields have risen as well, while Oil is at its highest level since the start of September.

Main Economic Data/Central Banks/Government (All times GMT)

8:15 a.m.: France Nov. PMIs
8:30 a.m.: Germany Nov. PMIs
9:00 a.m.: Euro-Area Nov. PMIs
9:30 a.m.: U.K. Nov. PMIs
1:10 p.m.: ECB’s Schnabel speaks
2:45 p.m.: U.S. Nov. PMIs
3:30 p.m.: BOE’s Bailey, Haldane, Tenreyro, Saunders speak before U.K. Treasury Committee

EU publishes MARS bulletin