After Joe Biden was declared the winner of the US election on Saturday the markets are now preparing for what this will mean for a UK-US trade deal and the final destination of Brexit. Brexit remains the single biggest driver for sterling exchange rates and these next two weeks will be crucial for the pound.
After last year’s UK general election which saw Boris Johnson win with a majority of 80, Joe Biden described the Prime Minister at the time as “a physical and emotional clone” of Donald Trump. The Financial Times reported this weekend that the Biden win may put pressure on the government to remove some of the contentious elements of the internal market bill. Biden who has Irish heritage is not prepared to make decisions that could jeopardise the Good Friday Agreement.
Sir Nigel Sheinwald who was a British ambassador to America wrote a letter to the Times stating, “Biden and his team respect the UK’s international credentials, but they saw Brexit as a major mistake. After a Biden victory and a failure to reach a trade deal with the EU, Britain would occupy a lonely place in the world.”
Biden will also be looking at improving relations with the EU and is widely expected that France may be the first point of call. The FT reports a senior diplomat said “We’re fully expecting the president to head first to France. Their teams have already been working closely together.”
This US presidential element is another twist to the ongoing Brexit negotiations which will continue this week in London. The level playing field and fisheries continue to remain the main stumbling blocks. Both sides see November 16th as the absolute deadline for a deal to be reached to allow sufficient time for the text to be translated and ratified.
UK unemployment data is released on Tuesday morning which will give some offering at as to the real health of the labour market at a time when the furlough scheme has just been extended. Most projections including those form the Bank of England expect unemployment to peak around December. Any deviation would likely impact on the economy and the pound. Thursday sees UK Gross Domestic Product numbers for the third quarter.
The EU have signalled that there will now be no V-shaped recovery following this second wave of coronavirus. The EU economy had recovered more quickly than forecast in the months of July, August and September but the recent spike in cases, which have overtaken previous levels, now put a full recovery years away. EU commissioner Paolo Gentiloni said “We never counted on a V-shaped recovery. Now we know for sure that we won’t have one.” The impact of Coronavirus continues to impact on EU output and the price of the Euro.
For the EU there may be more to be heard following the Covid-19 mutation which originated on a mink farm in Denmark which was then transmitted to humans. The new mutation dubbed the “cluster 5 variant” by the WHO, has a greater resistance to antibodies compared with other strains which has potential consequences for a future vaccine. This development will result in the killing of all 17 million mink in Denmark in the coming days.
EU Industrial production numbers are released on Thursday whilst Friday sees Gross Domestic product data for the third quarter.
After four days of counting Joe Biden was finally announced the winner on Saturday after he won the state of Pennsylvania. Mr Biden won more votes than any other presidential candidate at around 74 million and 4 million more than Donald Trump received. The election was called as Trump’s team held a press conference at the car park of the Four Seasons (Total Landscaping) accusing the Democrats of stealing the election whilst Donald Trump played golf.
Donald Trump has yet to concede defeat and legal challenges based on electoral fraud will be put forward today against the states he lost. Trump has said “this is far from over.” Whether this road goes anywhere is unclear considering no evidence has been put forward to date, but it could nonetheless result in financial volatility for the markets and the US dollar. Expect an interesting day depending on what the hundreds of lawyers involved put forward and whether it makes it to the Supreme Court.
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