What’s been happening?

Pound Sterling – UK Markets 

The pound sterling struggled to find demand on Friday and weakened against both the euro and the dollar as investors refrained from making large bets ahead of Sunday’s summit in Brussels. Speaking to reporters on Friday, former British Brexit Secretary Dominic Raab said that Prime Minister May’s Brexit deal would be voted down in the Parliament. Furthermore, the uncertainty surrounding the text on Gibraltar, which Spain openly said would cause them to veto the deal if it were not revised, continued to weigh on the sentiment.

However, following reports of the UK and Spain reaching an agreement over the status of Gibraltar on Saturday, the European Council President Donald Tusk on Sunday morning announced that the EU27 endorsed the withdrawal agreement. “The European Council endorses the agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community. On this basis, the European Council invites the Commission, the European Parliament and the council to take the necessary steps to ensure that the agreement can enter into force on 30 March 2019, so as to provide for an orderly withdrawal,” the EC said in an official statement.

In a press conference, PM May actively dodged questions on a possible resignation if the deal failed to through the Commons and repeated that she was focused on winning the vote. According to the Independent, the meaningful vote on Brexit is likely to take place on December 10 or 11.

US Dollar – US Markets

Despite the Thanksgiving holiday, the US Dollar Index finished the week on a positive note with the greenback rising decisively against the euro and the British pound. The data released by the IHS Markit on Friday showed that both the manufacturing and the service sectors in the U.S. lost momentum in November. Commenting on the preliminary Composite PMI report, “The November survey does raise some warning flags to suggest growth could slow in the coming months. In particular, the growth of hiring has waned as companies grew somewhat less optimistic about the outlook. Goods exports also appear to also be coming under increasing pressure, often linked to trade wars having dampened demand,” Chris

Williamson, Chief Business Economist at IHS Markit said.

Euro – European Markets

The business activity in the euro area expanded at a slower pace than expected in November with the IHS Markit’s Composite PMI falling to its lowest level in nearly four years at 52.4 in November from 53.1 in October. Similarly, Germany’s Composite PMI came in at its weakest level since December 2014 at 52.2. Assessing the data, “The Germany PMI continued to trend downwards in November, pointing to a sustained loss of underlying growth momentum in the euro area’s largest member state. “The survey data revealed that weakness in external markets continued to act as a restraining factor on performances across the private sector economy,” Phil Smith, Principal Economist at IHS Markit explained. 

Meanwhile, Italian Deputy Prime Minister Luigi Di Maio on Friday told reported that the government had no intention to leave the euro and reiterated that they would not change the pillars of the 2019 budget. “Italy will show the highest of willingness to negotiate with the EU,” Di Maio added.

What’s coming up? 

UK: The BBA will publish the mortgage approvals figures on Monday. Later in the day, Bank of England Governor Carney will be delivering a speech.

US: The Chicago Fed’s National Activity Index and the Dallas Fed Manufacturing Business Index will be featured in the US economic docket.

EU: The CESifo Group will release Germany’s business sentiment report. The European Central Bank’s Governing Council Members Nowotny, Praet, Coeure, as well as President Mario Draghi are all scheduled to speak on Monday.