Week ahead: Brexit, COVID-19, US and China data

Suban Abdulla
·4 min read
brexit concept - double exposure of flag and Westminster Palace with Big Ben
The UK and European Union delivered an early Christmas present on Thursday when Brexit negotiators announced they had finally agreed a trade deal. Photo: Getty

There is not much on the plate for the week ahead as 2020 draws to a close.

The UK and European Union delivered an early Christmas present on Thursday when Brexit negotiators announced they had finally agreed to a trade deal that would allow Britain to leave the EU without tariffs on goods originating in the UK or the EU.

Markets will closely watch the House of Commons vote on 30 December when ministers will vote on the 1,250 page Brexit deal a day before the transition period ends.

Meanwhile, there could be some bickering over wording of the agreement as UK prime minister Boris Johnson has urged backbenchers to back the deal when it reaches parliament.

COVID-19 continues to rage around the world and with lockdowns and restrictions continuing, there are still bans in place on UK travellers, although France has reopened its border, easing the trucks backlog.

Many nations have placed restrictions on travel and gatherings over the holiday period, to limit the spread of infections. But there has been some loosening of restrictions in areas in the UK. The world will be waiting over the next few weeks to see how much the virus has spread over the holidays.

UK: Brexit, COVID-19

TOPSHOT - Britain's Prime Minister Boris Johnson gestures as he holds a remote press conference to update the nation on the post-Brexit trade agreement, inside 10 Downing Street in central London on December 24, 2020. - Britain said on Thursday, December 24, 2020 an agreement had been secured on the country's future relationship with the European Union, after last-gasp talks just days before a cliff-edge deadline. (Photo by Paul GROVER / POOL / AFP) (Photo by PAUL GROVER/POOL/AFP via Getty Images)
UK prime minister Boris Johnson said on 24 December that an agreement had been secured on the country's future relationship with the European Union. Photo: Paul Grover / POOL / AFP via Getty Images

It’s another shortened week, with the UK markets closed on Monday and Friday and poised for an early close on Thursday.

The main event is of course Brexit.

Britain announced on 24 December that a Brexit trade deal had been agreed after last-gasp talks just days before a cliff-edge deadline before the UK would crash out of the transition period without an agreement.

The main issue of access to fishing waters surrounding the UK, has been resolved, and therefore, allowed to the deal to proceed.

Britain will allow a five and half year transition period to incorporate new rules and laws on how much fish the EU can catch. Afterwards, the fishing laws will be subject to annual reviews.

But, Brexit is far from over.

Because the deal was reached so close to 31 December, it does not give the pair enough time to work through the language and formally approve the agreement (particularly the EU). So, negotiations could recommence in 2021.

Economic stats are limited to December house price figures that will likely have a muted impact on markets and the pound.

US: Stimulus vote, jobs data

Facade FlagsJustice Department Building Pennsylvania Avenue Washington DC Completed in 1935. Houses 1000s of lawyers working at Justice.
But, like other markets, it’s a shortened week, with the US markets closed on Friday. Photo: Getty

As we enter the final few days of December it is a relatively busy week ahead on the economic front for America.

But like other markets, it is a shortened week with the US markets closed on Friday.

Last week Congress approved the long awaited second COVID-19 stimulus package. The package allows for an extra $300 (£224) a week in continued unemployment benefits — which were due to end on 26 December.

Additionally, the plan allows for $600 per person in direct aid. But, US president Donald Trump, who is seeking a higher payment has threatened to veto the plan as he wants $2000 per person in direct aid.

The original bill now is waiting for Trump’s signature. If he vetoes the bill, the current $300 in extra unemployment aid (from the original CARES act) will end.

The closely watched initial jobless claims figures that are due out on Thursday. Other stats including housing sector and trade data that will not have much impact on the dollar.

Eurozone: Muted week with Brexit fallout and French jobseekers numbers

Business district in Frankfurt am Main with giant Euro sign, Germany.
Most European markets closed on Thursday and Friday. Photo: Getty

Ending the year, there is not much activity in the Eurozone.

Most European markets closed on Thursday and Friday.

The only stats to consider are the French jobseeker figures out on Monday and prelim inflation figures for Spain on the slate for Wednesday.

Neither of those figures are expected to have a material impact on the euro however.

Elsewhere: China - it’s a relatively busy week for the country with December private sector PMI numbers due on Thursday and Friday. The Caixin Manufacturing PMI is due out on Friday, but most major markets are closed for New Year’s Day.

Watch: EU and UK unveil 1,246-page post-Brexit trade deal