GBP

Over the course of the week sterling saw major gains across the board as an agreement to intensify Brexit trade talks was announced on Wednesday. However, GBP/EUR revered some of these gains heading into the weekend as markets still remain wary. Michel Barnier arrived in London yesterday as discussions were set to resume. During a briefing held with EU diplomats on Wednesday he was quoted saying ‘ he wasn’t worried about anything apart from fish’. As we know, fishing rights has been a major issue throughout these talks and it appears to be the last hurdle for a deal to be reached. Analysts are predicting that a deal could be reach by mid-November, however, both sides are still willing to walk away should no concessions be made.

Yesterday Rishi Sunak unveiled yet another multi-billion pound job package amid fears of mass unemployment. With the furlough scheme set to end next week changes have been made to the new Job Support Scheme (JSS). These include reducing the level of employer contributions required to access the support to 5% of a worker’s usual wage, down from a previous level of 33% and also cutting the number of hours an employee must work from 33% to 20%. These changes came after increased pressure on Sunak to provide further support as parts of the country adhering to new tier lockdown restrictions.

Finally, Britain signed its first major post Brexit trade deal with Japan this morning. The deals comes after only four months of discussions. The deal would allow 99% of the UK exports to Japan to be tariff-free. It would also mean Britain remove tariffs on Japanese cars in stages until 0% in 2026.

USD

Yesterday saw the final presidential debate between Donald Trump and Joe Biden. After the first debate turned into a shouting match, last nights was carried out in a more civil demeanor. However, Trump didn’t hold back as he continually accused Biden and his family of corruption. A widening lead in polls by Biden is prompting many investors to bet on a Biden Presidency and a ‘blue sweep’ where Democrats with both chambers of congress. While Biden has proposed to increase corporate taxes, his pledge to offer a large, much needed, stimulus package is driving this lead. With just under two weeks until the election we expect markets to remain volatile.

Key announcements

08:30 GMT – German Manufacturing PMI (OCT)
08:30 GMT – UK Markit Manufacturing PMI (OCT)
08:30 GMT – German Markit PMI composite (OCT)
09:00 GMT – EUROZONE Market PMI Composite (OCT)