Forex Weekly Outlook Dec. 28-Jan. 1 2021 – Brexit And US Stimulus Bring Some Christmas Cheer

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There was a flurry of activity as the year draws to a close, as agreements were reached between the EU and UK on Brexit and Congress approved a fiscal stimulus package. The upcoming holiday week is light on data, and the currency markets are likely to be calm as investors and traders eye the New Year, which is just around the corner.

The Brexit talks went down to the wire, but in the end, the European Union and UK finally hammered out an agreement on Thursday, just before the UK leaves the bloc on December 31. There were fears that a deal might not be reached, which triggered losses for the pound earlier in the week. UK Final GDP for the second quarter was revised upwardly to 16.0%, up from 15.5%. This was a sharp rebound from the Q2 release of -19.8%.

In Canada, GDP has been slowing since hitting 6.5% in June, and economic growth came in at just 0.4% in October. This edged above the consensus estimate of 0.3%. Has the Canadian economy run out of steam?

In the US, Congress approved a massive stimulus package, but President Trump has thrown a wrench in the process, saying he will veto the bill unless stimulus payments are substantially increased. US Final GDP for the third quarter was revised upwards to 33.4%, up from 33.1%.  Despite this strong gain, the US economy remains below pre-pandemic levels.

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