Morning Report – Wednesday 9th December

John Robson, Head of Trading

“Sterling has rallied significantly since Monday’s sell off, caused by a stream of unsubstantiated news reports. Once again the pound is well supported, in anticipation of an imminent announcement on the future EU-UK relationship.”

Main Headlines

Boris Johnson is set to meet Ursula Von der Leyen in Brussels today to finalise Brexit discussions before the EU council meeting on Thursday. A breakthrough in talks on the Northern Ireland protocol has boosted confidence between the two sides and renewed optimism that a Brexit deal will be announced in the coming days.

Another blow was dealt to US fiscal stimulus talks as Steve Mnuchin’s proposed $916 billion Covid-19 relief bill was shot down by both Chuck Schumer and Mitch McConnell. This was the first substantial move by the White House administration since the election and is a continuation of a saga that will last a while yet.

GBP

The pound is higher against the dollar, but lower against the euro in trading this morning. Today is a busy day for Brexit, as the House of Lords will vote again on the internal market bill, while the House of Commons tackle the UK taxation bill. Boris Johnson will meet Ursula von der Leyen for dinner, where she will represent a united front of the trading bloc, despite talk behind the scenes of disagreements between French and German officials.

EUR

The euro is higher against the dollar in early morning trading today. Eurozone GDP for Q3 came in yesterday as expected at +12.5%, while the ZEW survey showed economic sentiment was better than expected, likely to do with stagnating Coronavirus cases in the continent. However, with that being said, officials in Germany are pushing for Merkel to extend the lockdown as cases begin to trickle up again.

USD

The dollar is lower against most major currencies but is higher against the Japanese Yen this morning. Time is running out for Trump who witnessed another election defeat yesterday as the Supreme Court decided to certify the Pennsylvania election result. US regulators continue to test the Pfizer/ BioNTech vaccine, and could be approved as early as next week.

Markets

Global equities are positive today, after US stocks saw record highs yesterday as investors focused on the renewed possibility of a fresh stimulus package over rising Coronavirus cases. Bond yields rose while Oil prices were mixed, however Gold prices are continuing to fall.

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

7:00 a.m.: Germany Oct. Trade
8:00 a.m.: Spain Oct. Industrial Output
8:00 a.m.: South Africa Nov. CPI
3:30 p.m.: EIA Crude Oil Inventory Report

Germany’s Merkel speaks at budget debate
France’s Macron presents security plan
Italy’s Conte faces vote on ESM reform
Boris Johnson meets with Ursula von der Leyen in Brussels