Macro Commentary

Brexit obviously continues to dominate the news, as we focus on next Tuesday’s parliamentary debate on the amendments and way forward from here.

Meanwhile, UK earnings data this week were relatively strong, with wages growing at their fastest pace since 2008, and unemployment down to 4%.

In Europe, the ECB yesterday kept policy on hold as widely expected, with Draghi warning of increased risks to the growth outlook.

Whilst in the US, the government shutdown continues, and will inevitably weigh on first quarter economic growth.

China growth has slowed to its lowest in three decades, with the ongoing trade negotiations with the US adding uncertainty.

On the exchanges, sterling has rallied strongly over the last few days, on increased hopes of a softer Brexit.

GBP/USD pushed up towards 1.3150, its highest level since November. There is some selling interest there, with support now lying at 1.2900.

GBP/EUR hit 1.1600, but there remains strong selling interest above that level. There continues to be good support at the 1.1250 level.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
30/1/19 US FOMC Rate (Upper Band) 2.50% 2.50%
1/2/19 UK Markit PMI Manufacturing SA 54.2  53.5

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 6818 +1.51%
S&P 2642 +5.40%
EUROSTOXX 3126 +4.95%
DFM GENERAL INDEX 2514 -0.63%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1325 AUD/USD 0.7105
GBP/USD 1.3080 USD/AED 3.6730
GBP/EUR 1.1550 GBP/AED 4.8050
USD/CHF 0.9960 EUR/AED 4.1600
USD/JPY 109.90 XAU/USD 1283

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.92563% 2 year 1.16%
6 month 1.04313% 3 year 1.22%
12 month 1.16988% 5 year 1.32%

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