Merkel said in a TV interview yesterday that she is not keen to lead a minority government and doesn’t fear holding another election – however this stance may be at odds with other members of her party as they worry that the rightwing nationalist AFD party will be able to win even more votes this time round. This uncertainty made for a volatile day for the euro yesterday as it fell to a low $1.17 before climbing to over $1.18 and then retracing to mid $1.17 again. It has stabilised in early trading although traders will be keeping an eye on any developments.

Newspaper reports suggest British PM Theresa May has managed to win support from her ministers to increase the Brexit divorce bill in order to break the deadlock in talks next month. However her Eurosceptic colleagues warned that any increase in the financial offering must be conditional on a good trade agreement and a transition deal with the EU. Expectations are that May will hold off making the offer until the last possible moment, likely to be early December, and when she is certain it will progress the talks. “The UK and the EU should step forward together” May’s office said in a statement indicating their expectation that the European negotiators must match the UK’s offer with a commitment to start discussing trade agreements.

The rumble in Zimbabwe continues with Robert Mugabe still refusing to resign. A Zanu-PF official said a motion to strip him of the presidency would be presented to parliament today and that the process could take just two days. It is reported that Mugabe, the oldest world leader, is in talks with Emmerson “the Crocodile” Mnangagwa, whose sacking as vice president triggered the military takeover. He is widely expected to be the next president, with ZANU-PF announcing him as their candidate for the proposed 2018 general election, and has strong support from the military.

The day ahead

UK public figures are out today and are expected to show that the main borrowing measure (PSNBx) is on track to come in considerably below the Office for Budget Responsibility’s March projection for the fiscal year 2017/18. Bank of England officials will be appearing before the Treasury Committee in Parliament today for a hearing on the UK November Inflation Report. In the US, the Chicago Fed National Activity Index for October is out this afternoon along with existing home sales.

Thought of the day

Last week, Greggs was more in vogue than ever after being lambasted by a smattering of heavy duty Christians for replacing the baby Jesus with one of its pork-based pastries in a classic nativity scene. Most weren't offended, of course, but it was a topic of debate all the same. Now an artist has captured Jesus' holy image using a Greggs sausage roll as a paintbrush and a squeeze or two of tomato ketchup in lieu of paint. Responses to something a little out of the ordinary can often take people by surprise. Many expected the Bank of England’s rate hike last month to trigger a rally in sterling, however it looks like Brexit concerns are enough to keep the pound reigned in for now. If you are thinking about what potential surprises lay in store for 2018 and would like to discuss how you can navigate what has the potential to be a very volatile year please call the Investec Dealing Desk on 0800 055 6339.