It’s looking like a blue Christmas for the UK, with a new Covid-19 variant, lockdown measures, and no Brexit deal either. GBP has been dragged to 1.33 handle as a consequence, and there may be room to move lower, pending Brexit dynamics. The USD bid is broadly seen across our markets, with EURUSD trading around 1.22 and high yields like MXN and ZAR returning to familiar levels.

The US fiscal stimulus deal struck this weekend is somewhat overlooked, but should keep US assets supported. With little in way of catalysts today, headlines remain the main mover. PLN is in focus after central bank intervention on Friday, while RUB may be vulnerable to further correction.

A Brexit deal is still in the making. We think the move is fair, as GBPUSD has rallied recently on optimism on timing, rather than eventuality. CitiFX Strategy maintain a 80% probability of a deal by year end. We note that press and negotiator focus now seems to be on fish, suggesting that the level playing field issues are largely solved.

Expect further Brexit noise today as Sunday’s deadline was set by European Parliament members. David McAllister, the chairman of the UK Coordination Group in the EP, late Sunday. He continued: “I am convening an extraordinary meeting of the European Parliament’s UK Coordination Group tomorrow morning at 9:45 to assess the situation and discuss the next steps.”

The other issue is Covid-19. On Saturday, Boris Johnson’s government made a U-turn and created a new Tier 4 category for London and surrounding areas of South East England. Having placed these areas in Tier 3 only Wednesday, the timing came as a surprise as it cancels a relaxation of rules over Christmas. Non-essential shops, gyms and places like hair salons were shut effective Sunday.

US Congressional leaders reached a deal on a roughly USD900bn on fiscal stimulus at long last. The accord was announced Sunday with the legislative text was still being written. The House are expected to vote on it Monday, followed by the Senate.

According to Bloomberg, the plan would provide direct payments of $600 to most Americans and $300-per-week in enhanced unemployment benefits through March.

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