By Ashley Finill
A feeling of deja vu is in the air as we are nearing to the end of the year and once again talks of Brexit deals are in the news yet again, if you thought that Brexit was done and dusted as of the 1st of January 2021 then think again. The Brexit deal that had been agreed at the last hour in December between the UK and the EU which was described at the time a monumental moment by Boris Johnson and his Brexit negotiators is seemingly starting to break down nearly 12 months later. Boris Johnson and David Frost are reported to be considering triggering article 16 of the Northern Ireland agreement and in response the EU are prepared to suspend the trade deal agreed with the UK which could spell disaster for Sterling. As we have seen over the past 5 years uncertainty is not Sterling’s friend and this is likely to cause mass uncertainty amongst investors if a no-deal was back on the cards and no further negotiations to take place. This current talk of the deal being potentially removed from the table won’t go down well in the House of Commons for what has been an embarrassing and volatile time for the Conservatives these past couple of weeks. Firstly, with the U-turn vote on Owen Paterson with the MP consequently stepping down from his duties and now the press reporting that Sir Geoffrey Cox could have also broken rules working two jobs and making money due to his position in government. With all the above the Conservatives could be in for a rough ride with the potential of some positions in the top jobs at stake.
UK Economy Growth Slows in July- September
The UK economy’s growth slowed between July and September as supply issues hit certain sectors and hindered the recovery from the Coronavirus outbreak. GDP recorded a figure of 1.3%, massively down from the previous figure of 5.5%. Naturally, the economy received a massive boost between April and June as the UK emerged from lockdowns as consumer spending increased. Come July a third wave of the virus was ripping its way through the UK and cases soared, and many people getting pinged via the NHS had to self-isolate for at least 10 days. This brought mass supply problems to most sectors with haulage experiencing problems leaving workplaces with heavy staff shortages. With the winter starting to set in and cases steadily rising this could be something to keep in mind as it is likely cases will continue rise throughout the UK. The government are pushing the public to take the booster jab with only 10 million so far having taken it. If situations like the petrol shortage crises in other sectors arise again then we can expect it to again to effect on the economy and consequently hurt the Pound, not good news for those of who need euros in the coming months.
Key Data Today & Next Week
With most of this week’s data already released there are only a couple to note today starting in the EU at 10am as Industrial Production is to be released. Later in the afternoon at 2pm the Bank of England member Jonathan Haskel speaks, he may shed some light on the interest rate decision in the UK last week and what we might expect from next month’s meeting. Next week a raft of data is to be released mainly in the UK. On Tuesday, the unemployment rate is to be posted at 7am with EU GDP coming in at 10am. On Wednesday, the UK records CPI data at 7am and across the pond retail sales will be released at 1.30pm and on Friday the UK release retail sales figures, a very busy week on the data front which all have the potential to move the currency markets.