China GDP Britain problems and Biden's expectations

Yesterday was a holiday in the United States, so it was calm in the financial markets, and nothing extraordinary happened in the fundamental background.

The main news of the day can be considered the publication of China's GDP for 2020. An increase of 2.3% against the background of the GDP drop in the overwhelming majority of other countries is a clear positive. But, on the other hand, for China, this is the worst result in the last 45 years, which somehow does not look very happy. The data on industrial production and retail sales also caused a strange feeling: the growth of the first indicator by 7.3% is a clear positive, but the 4.6% of the second after previous 5% was rather disappointing.

But in general, China still inspired hope for a bright future. What cannot be said about the pandemic, which has not yet been brought under control in the world. As a result Germany decided to extend the lockdown until mid-February, which reminded the markets that the solution to the problems of the world economy will not be quick and immediate.

The UK, meanwhile, continues to "enjoy" life outside the EU. Judging by a number of groans from business in the country, not everyone is happy with what has happened: new taxes, additional certification, rising costs for the delivery of products to Europe, a ton of additional paperwork - these are not all the consequences that have befallen companies. According to the Bank of England, only 6% of companies were ready for this, the rest plunged into chaos.

Brexit could cost British exporters £ 25bn ($ 34bn) this year as a result of weak demand and increased bureaucracy, according to a report by insurance company Euler Hermes Group SAS, leading to a 1.1% contraction in gross domestic product.

In this light, our recommendation to sell the pound continues to be more than relevant. The only thing we would like to note is that in the current conditions it is safer to do this against the euro, that is, to buy the EURGBP pair.

Janet Yellen, Biden's nominee to run the Treasury Department, will tell the Senate Finance Committee on Tuesday that the government must "act big" with the coronavirus relief plan. And on Wednesday, Biden will become the new President of the United States. That can provoke another wave of hopes for the best from the financial markets.