Macro Commentary

The Brexit uncertainty continues, with parliament looking for an amendment to the backstop, and the EU insisting there will be no renegotiation. Prime minister May will now come back to parliament by Feb 14 latest, with an updated plan. With time now fast running out, various hugely different outcomes all still remain possible.

In the US, the Fed kept interest rate policy on hold as expected, with the committee saying they will be patient before raising rates further.

US – China trade talks seem to have made some positive progress, with negotiations ongoing.

On the exchanges, the dollar has sold off across the board on the rather dovish Fed meeting, whilst sterling has held on to its recent strength.

GBP/USD tested 1.3200 earlier this week, its highest level since October. We expect strong selling interest at 1.3250 initially, whilst 1.3000 provides short-term support.

GBP/EUR, having failed at the 1.1600 level, has drifted lower, although we still look to buy on dips to 1.1250.

Focus today will be on the US jobs data due at 1.30pm.

GBP/EUR – 1-year chart

Week ahead

Date Release Last Expected*
4/2/19 UK Markit/CIPS Construction PMI 52.8  52.5
5/2/19 UK Markit/CIPS Services PMI 51.2  51.0
7/2/19 UK Bank of England Bank Rate 0.75% 0.75%

*Bloomberg survey

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1450 AUD/USD 0.7250
GBP/USD 1.3100 USD/AED 3.6730
GBP/EUR 1.1440 GBP/AED 4.8120
USD/CHF 0.9945 EUR/AED 4.2050
USD/JPY 108.95 XAU/USD 1318

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 6968 +3.92%
S&P 2704 +7.87%
EUROSTOXX 3159 +5.34%
DFM GENERAL INDEX 2567 +1.46%

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.91200% 2 year 1.10%
6 month 1.02700% 3 year 1.15%
12 month 1.16688% 5 year 1.25%

London

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DG-FX@arbuthnot.co.uk

Dubai

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dubai@arbuthnot.co.uk

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