Sterling was on the back foot as EU Commission President von der Leyen and PM Johnson met at Downing Street. Sterling moved lower as EU Commission President von der Leyen stated that it would be impossible to negotiate a full trade deal with the UK by the end of 2020.
Overnight, the British Retail Consortium reported weak retail sales over the Black Friday and Christmas period on a year-on-year basis however, these do not require numbers from Amazon. That said, it appears that these could be the worst in 25 years. Political uncertainty and the General Election may have played its part in this bleak report.
Looking to the day ahead, the EU Withdrawal Agreement bill is expected to conclude its passage through the House of Commons before going to the Lords where it is expected to pass. The market is likely to focus on the Bank of England conference titled ‘The Future of Inflation Targeting’ with BoE Gov. Carney making the opening remarks.
President Trump Eases Fears of Further Escalation in the Middle East
The market was yet again focused on tensions in the Middle East yesterday following Tuesday night’s bombings in Iraq. President Trump held a press conference and eased fears of further escalation stating that Iran is backing down. However, the market will continue to monitor the situation to see if tensions could increase further in the coming days.
In the meantime, there was some key labour data ahead of the all-important US government labour data. The US ADP data recorded an increase in private-sector jobs of 202,000 for December, well above consensus forecasts of 160,000. In addition, November’s data was revised higher as well. Tomorrow’s key labour data is expected at a figure circa 160k. However, the market takes notice of the ADP but rarely reacts to it, this is due to the large historic divergence seen between the government numbers and theirs. The US dollar did make gains pre and post the figure release, mainly due to the risk aversion mood surrounding the Middle Eastern tensions.