Brexit: Week One — How’s it going?
Welcome back to another week of trading! You’re right on time, we’re just about to get started with another trading preview. This week, we’re going to take a look at Brexit, one week after the UK officially jumped the EU ship. How’s it going? Read on to find out. After that, we’ll give you a rundown of the most important events coming up this week. Let’s do this!
Delays, cancellations and mountains of paperwork
A week has passed since the UK formally withdrew from the European Union. What’s that week looked like? Well, it’s been mired by delays, cancellations and mountains of paperwork. Those six words aren’t exactly brimming with excitement, but did we really expect anything else?
The new trade deal, hot off the press, is now in full swing and it’s brought difficulties for UK businesses and companies all over the place. Food deliveries have been delayed, waiting for the right customs paperwork to come through, logistics companies have had to stop shipping goods, and retailers have struggled to operate their previously reliable supply chains. Not so good.
Andrew Bailey, governor of the Bank of England, this week told a parliamentary committee that the Brexit deal would cost the British economy around 2 percent of its GDP over the next few years. The bulk of that amount would come from ironing out these bureaucratic creases, or as he put it, getting rid of the “the grit in the mechanism.”
But wait, it’s not all bad!
Flipping the coin, it’s actually been a pretty excellent week for UK investors. In fact, the FTSE100 Index recorded its best ever start to a new year, rallying 6.4% so far in 2021.
FTSE 100 index
Source: Google
There appears to be a general level of investor optimism bubbling to the surface, in spite of yet more pandemic lockdowns. This is partly thanks to global COVID-19 vaccine rollouts and the potential for a widespread economic rebound in the not-so-distant future. Investors are keen to jump on the boat early.
But it’s not just the UK, either. Investors have been backing banking and energy shares around the world. There’s a strong belief that the additional US stimulus (which will come now that the Democrats control both the Whitehouse and Congress) will provide a major boost to the global economy.
Exciting times.
So, to sum up… After one week of being out of the bloc, bar the obvious bureaucratic lag, there are actually some promising signs for the UK. The hope will be that the red-tape grit will start leaving the mechanism sooner rather than later.
We’ll be keeping our keen eyes on this over the coming months, of course!
What’s on the trading agenda this week?
There’s not a massive amount cooking, this week. Here’s everything you need to know:
Monday 11th January
● CNY — Inflation Rate YoY (DEC)
Tuesday 12th January
No major events planned
Wednesday 13th January
● USD — Core Inflation Rate YoY (DEC) & Inflation Rate YoY (DEC)
Thursday 14th January
● CNY — New Yuan Loans (DEC)
● EUR — ECB Monetary Policy Meeting Accounts
Friday 15th January
● GBP — GDP 3-Month Avg (NOV) & GDP YoY (NOV)
● USD — Retail Sales MoM (DEC) & Michigan Consumer Sentiment Prel (JAN)
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Speak soon!
The Contentworks team
