Macro Commentary

The US central bank raised rates by a further 0.25% this week as widely expected, despite Trump’s objections.

The committee did however, reduce the expectations for rate increases next year to a further two, down from three previously.

In the UK, May announced the parliamentary vote on her Brexit deal will take place in the week of January 14. She continues her efforts to gain further concessions from the EU ahead of the crucial vote.

There remains huge speculation on the next steps should the deal be voted down.

On the data front, inflation has dropped to 2.3%, a 20-month low, led by a sharp drop in oil prices. This further benefits the consumer following average earnings ticking up to 3.3%.

On the exchanges, liquidity continues to drain from the markets as we move towards year-end.

GBP/USD has nudged slowly higher, but remains in a 1.2500 – 1.2750 range for now.

GBP/EUR has dropped lower, but remains above the significant 1.1000 level. Sentiment remains negative whilst we remain below 1.1250.

This report will return January 4 2019.

We wish our clients a very merry Christmas and a happy new year!

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*

*Bloomberg survey

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1465 AUD/USD 0.7110
GBP/USD 1.2685 USD/AED 3.6730
GBP/EUR 1.1065 GBP/AED 4.6600
USD/CHF 0.9870 EUR/AED 4.2100
USD/JPY 111.15 XAU/USD 1261

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 6711 -12.79%
S&P 2467 -7.71%
EUROSTOXX 3000 -14.98%
DFM GENERAL INDEX 2509 -25.55%

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.90838% 2 year 1.16%
6 month 1.03294% 3 year 1.23%
12 month 1.16275% 5 year 1.32%

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