Fishing is now widely seen as the one issue that could still sink a post-Brexit trade deal. Secret talks between Boris Johnson and European Commission president, Ursula von der Leyen yesterday aimed to unlock a compromise on access to British waters. This intensification of the process is a hallmark of the final stages of EU negotiations – typically referred to as “the tunnel” – and represents a crucial moment ahead of a final push for a deal. The EU’s chief negotiator, Michel Barnier said “We are giving it the final push. In ten days, the UK will leave the single market and we continue to work in total transparency with the member states right now and with the parliament.” Failure to reach an accord at the eleventh hour would trigger a hard Brexit on 01 January – and yet more economic uncertainty.
With the chances of a trade deal resting on a knifes edge, the pound to dollar rate slid steadily lower for much of yesterday – briefly dipping below the 1.34 level. The pair managed to steady itself slightly through the night and into this morning, as investors wait to see if the EU will accept the UK’s revised proposal for a reduction in the catch by value in British waters. It is believed that Britain has made an offer of a five-year transition period – about 65 per cent of the catch available to the EU – together with a joint procedure for allocating quotas and managing disputes. While regarded as generous, it would come as a blow to the fishing industries of France, the Netherlands, Ireland, Belgium and Denmark, who rely heavily on their current access rights to British waters.
US Experiences Record GDP Growth in Q3
The dollar was firm yesterday, but could not repeat Monday’s heroics when it marched higher on the back of coronavirus concerns in Britain. It was offered a modicum of support by the latest GDP figure, which revealed that the US economy grew at a record pace in the third quarter – thanks to more than $3 trillion in pandemic relief. However, it appears to have lost momentum as the year drew to a close, against a backdrop of new coronavirus cases and dwindling fiscal stimulus.
Economic data is thin on the ground in the UK this week, and today is no different. In contrast, it’s a busy day in the US calendar today, where a raft of releases hit the headlines, including Durable Goods Orders and Nondefense Capital Goods Orders excluding Aircraft – both for November.
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