Macro Commentary

Brexit is obviously dominating the market, and despite the government Cabinet accepting the terms of the agreement, the biggest challenge for Prime Minister May is whether she can get the backing of Parliament. There remains huge uncertainty, with many scenarios still possible, including a potential no-confidence vote in May and a leadership challenge.

For the UK economy, headline earnings were up 3.2%, the fastest growth rate in a decade, whilst inflation remained at 2.4%.

Retail sales however, came in much weaker than expected.

In the US, Fed chair Powell said he is very happy with the performance of the US economy, and expects the positive growth momentum to continue.

On the exchanges, sterling remains highly volatile and completely driven by Brexit.

GBP/USD, having failed just below 1.3200 last week, dropped to 1.2730 yesterday on the lack of support for May’s Brexit agreement.

Last month’s low around 1.2700, and the August low of 1.2660 are the next downside levels to watch, with 1.3050 the initial topside level from here.

GBP/EUR remains in a 1.1200 – 1.1500 range for now.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
21/11/18 UK Public Sector Net Borrowing 3.3b  5.3b

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7038 -7.86%
S&P 2730 +2.12%
EUROSTOXX 3190 -8.46%
DFM GENERAL INDEX 2778 -17.57%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1350 AUD/USD 0.7270
GBP/USD 1.2820 USD/AED 3.6730
GBP/EUR 1.1290 GBP/AED 4.7080
USD/CHF 1.0060 EUR/AED 4.1710
USD/JPY 113.30 XAU/USD 1216

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.88650% 2 year 1.15%
6 month 0.98650% 3 year 1.24%
12 month 1.14113% 5 year 1.37%

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