Today is the day Prime Minister Boris Johnson confirms whether the UK will continue with Brexit negotiations. Johnson last month set the deadline for the deal for Oct. 15, saying if nothing had been agreed, the two sides would have to ‘agree to this and move on’, giving the UK time to focus on preparations without a deal.
At a summit in Brussels on Thursday, the EU offered additional “two to three weeks” of negotiations. Markets are now poised to see whether Johnson attempts to move forward and strike a deal or stick to the threats of the past month and walk away.
Pessimism around Brexit has pushed the pound down towards 1.2863 against the US dollar, with the cable now trading around 0.2% at 1.2886. Against the euro, the pound is almost stable at 1.1014.
But all of this is happening as the Covid crisis accelerates again, with cases rising steadily across Europe. France has declared a state of emergency and London is set to face tighter restrictions from midnight Friday.
Jasper Lawler, head of research at LCG, says tougher foreclosure rules threaten economic recovery and could push European economies – including the UK – into a double-dip recession:
The UK government is under pressure to follow scientific advice for a nationwide two-week breaker lockout, but has so far resisted, but has raised capital to level 2 restrictions. This means that two different families can no longer mingle indoors – whether in their home or in a pub or restaurant.There is still no sign of the EU stimulus fund, so in the meantime economies are expected to take the hit – risking a double-dip recession – from the new restrictions.
But after falling on Thursday, European stocks are expected to rise this morning:
- 10 a.m. BST: Eurozone inflation for September (final reading)
- 1:30 p.m. BST: US retail sales for September
- 2.15 p.m. BST: American industrial production for September