Macro Commentary

The Bank of England kept monetary policy on hold yesterday, although governor Carney was slightly more hawkish than expected.

There were some positive Brexit headlines in the press regarding an agreement on financial services, but these remain unsubstantiated. Brexit minister Raab has said he remains confident of an agreement this month.

UK data continued to weaken this week, while US data has remained relatively strong.

In Europe, inflation edged higher despite economic growth continuing to slow.

On the exchanges, sterling volatility remains high, and extremely reactive to Brexit headlines.

Today’s focus is on the US payrolls data due at 12.30pm.

GBP/USD weakened to 1.2700 earlier this week, its lowest level since August, before rallying back above 1.3000 this morning.

GBP/EUR briefly dropped to 1.1200 where it met some strong buying interest as expected. However, we are likely to see continued selling interest above 1.1400.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
5/11/18 UK Markit/CIPS Services PMI 53.9 53.4
9/11/18 UK Industrial Prod. YoY 1.3% 0.3%
9/11/18 UK Manufacturing Prod. YoY 1.3% 0.1%
9/11/18 UK GDP YoY 1.2% 1.4%

*Bloomberg survey

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1435 AUD/USD 0.7240
GBP/USD 1.3025 USD/AED 3.6730
GBP/EUR 1.1390 GBP/AED 4.7850
USD/CHF 1.0005 EUR/AED 4.2000
USD/JPY 112.90 XAU/USD 1234

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7114 -6.88%
S&P 2740 +2.50%
EUROSTOXX 3204 -7.52%
DFM GENERAL INDEX 2805 -16.77%

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.80869% 2 year 1.18%
6 month 0.91225% 3 year 1.28%
12 month 1.07000% 5 year 1.43%

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