Last week we saw another one for the history books as the House of Representatives voted to impeach President Trump following the uprising at the Capital the previous week. This makes President Trump the first President to be impeached twice. President Elect Biden is due to be inaugurated on Wednesday.

In the meantime, a stronger US dollar emerged this week for several reasons. Firstly, the single currency lost momentum after comments from various Central Bankers, including ECB President Lagarde, commented about the potential for verbal intervention if the currency continued to strengthen. Compounding Euro weakness were concerns over the ongoing COVID backdrop as German Chancellor Merkel stated that restrictions may need to be in place until April.

Sterling made gains against the single currency but lost ground against the US Dollar. Conflicting comments from BoE officials on the likelihood of negative interest rates in the UK fueled fluctuations in Sterling. This is likely to remain a factor until the central bank’s report on negative rates is released next month. Keeping sterling positive was the ongoing momentum behind its vaccination programme.

Th US Dollar made gains as risk appetite remained fragile with the new variant in the COVID strain from Brazil and the ongoing pressure and uncertainty this brings. President Elect Biden proposed a $1.9trn fiscal stimulus package this week, on top of the $900m package that was passed by Congress late last year.

Biden will want to get these new measures through Congress as quickly as possible. However, with several FOMC figures, including the Chair and Vice Chair of the Central Bank, suggesting that inflation needs to be above target for over a year before any change to policy, the risk of slow progress remains.

Looking to the week ahead, the global focus is likely to be on the Inauguration of Joe Biden on Wednesday. In terms of other news, focus will remain on BoE speakers Gov Bailey and Chief Economist Haldane as the market continues to decipher the probability of negative interest rates in the UK. The ECB policy meeting is likely to hold rates, but the rhetoric will monitor closely following comments about the strength of the signal currency last week.


  • UK Rightmove House Price Index
  • BoE Gov Bailey speech

The Rightmove house price index will provide the market with an idea of the impact lockdown mk. 3 is having on house prices. Following last week’s mixed comments, the market will once again focus on Bank of England (BoE) Gov Bailey comments regarding negative interest rates. BoE Gov Bailey is due to speak about a range of climate issues at a webinar hosted by the Bank of England.


  • German ZEW Sentiment
  • BoE Member Haldane Speaks

The German ZEW is set for release and provides a good indication of sentiment looking forward. It surveys about 300 German institutional investors and analysts about the months outlook. It is expected to post a second consecutive rise with some expectations forecasting a rise to 60 in January from 55 in December reflecting growing confidence conditions will improve later this year. In the meantime, focus will once again be on the BoE speakers for clues on future policy, particularly the scenario of negative rates.  Chief Economist Andy Haldane is due to speak at an online event hosted by the University of Oxford.


  • UK inflation (CPI, PPI and RPI)
  • Eurozone inflation
  • President Biden’s inauguration

With interest rates at record lows and the economy continuing to be under strain in both the UK and eurozone, it is unlikely that inflation data will move the market for the time being. In addition, these events are likely to be overshadowed by events across the pond as President Elect Biden inauguration is due to take place. He has already signalled that a key near-term priority will be ensuring the economy’s rebound from its current pandemic-induced malaise and will want to get new measures through Congress as quickly as possible.


  • ECB Policy Meeting
  • US Weekly jobless claims
  • BoE Gov Bailey Speaks

It is likely that the ECB will leave monetary policy unchanged. The ECB made some significant easing moves at its December meeting; it is therefore unlikely that we will see further action right now. However, it will be interesting to see to what extent the ECB’s view on economic developments have changed in response to the recent rise in restrictions. It should be noted that ECB President Lagarde said this week that she felt the ECB’s December projections were ‘still plausible’.

The jobs number have become more in focus in recent weeks in the US following the recent negative non-farm payrolls numbers.

Once again BoE Gov Baily is due to speak once again. Bailey is due to speak at a virtual Citizens’ Panel Open Forum hosted by the Bank of England.


  • UK Retail sales
  • UK/EZ and US PMI services and manufacturing data

Markets will focus on growth data from the UK, Eurozone area and the US in the form of the PMI manufacturing and services data. However, with restrictions in place and differentials in various nation response the market may discount the importance of these figures. The UK retail sales are also due for release and could post a further decline following lockdown measures in December and the cancelling of the 5 days of Christmas.

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