09/12 – Once again, Boris in Brussels

09/12 – Once again, Boris in Brussels

GBP: Ports starting to feel the Brexit pressure

EUR: Held up ahead of tomorrow’s ECB meeting

USD: New stimulus hopes help USD lower


Boris Johnson will head to Brussels later today for what seems to be a final push for a Brexit deal. He will meet EU President Ursula von der Leyen this evening and try and lay the ground work for further negotiations despite Michel Barnier’s push for a decision by tomorrow’s European Council summit.

Sterling is optimistic this morning that another deadline has been extended and that a deal could and should eventually be done and while there will be some scene setting and expectation management by both sides before the meet, we expect sterling to remain supported heading into the dinner and negotiations.

The reality of Brexit however is already being felt at the nation’s ports with the car manufacturer Honda shutting its operations today due to a breakdown of its supply chain and a lack of delivered parts. The combination of Brexit, Christmas stockpiling, Covid and a lack of understanding of what international trade will look like in a post-Brexit world are all hitting at the same time.

We don’t expect people to start stockpiling Hondas. We do expect food items and medicines to look a little scarcer on the shelves heading into the new year.


A re-emergence of a little of risk appetite managed to keep the single currency from rattling lower as we head into ECB meeting territory. Our expectations for tomorrow’s policy meeting don’t differ hugely from the market consensus with an expected increase in asset purchases by around EUR550bn and an extension of the time within which that money can be deployed out until the end of 2022.

Such an announcement would likely take some of the steam out of the EUR rally albeit only for a short time; if markets key in to the belief that this is to super-charge a recovery and not dig the Eurozone out of a hole then conversations will switch to a higher euro on greater growth expectations. That being said, we expect the ECB will lower its growth predictions for the Eurozone at tomorrow’s meeting.

German data has remained supportive of the euro; Chinese demand for German exports has remained strong in the global recovery despite a stronger EUR.

US dollar

Stimulus conversations remain the driver of dollar markets and despite the lack of advancement, the news that the deal total has risen to $916bn from $908bn and the government seem to be the main driver of such a package, has helped markets see the optimistic side.

While House Speaker Pelosi said the plan was “progress”, we remain unconvinced that politicians will be able to get an agreement together in the 45 days that Trump remains the President.


The Bank of Canada meeting today should be a quiet one following the decision in October to extend both asset purchases and forward guidance. We do expect that the Bank of Canada will remain accommodative through 2021, and helped by a stronger oil price and a calmer trading relationship with the US, should see the CAD outperform in the coming 12 months.

Have a great day.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.