Macro Commentary

In yesterday’s Brexit debate, Parliament rejected the Government’s motion seeking to reaffirm support for May’s plan. The focus now is very much on the parliamentary debate on Feb 27, widely seen as a crucial date in deciding the eventual outcome.

Meanwhile, the UK economy continues to weaken, with growth at its lowest since 2012. Inflation has dropped to 1.8%, below the Bank of England’s 2% target for the first time since 2017.

In the US, trade talks with China are making slow progress, with the dollar continuing to benefit from its safe-haven status.

On the exchanges, sterling remains under pressure following last night’s parliamentary vote.

GBP/USD has dropped to 1.2800 on the political uncertainty, as time continues to run out ahead of the March 29 exit date. There remains strong buying interest at 1.2750, with 1.3050 the initial topside level to watch.

GBP/EUR is back below the 1.1400 pivot level. There remains strong buying interest at 1.1250, whilst the recent high of 1.1600 continues to cap the topside for now.

EUR/USD has dropped to a year-to-date low of 1.1250, helped by general dollar strength, and a continuation of a weakening European economy.

GBP/EUR – 1-year chart

Week ahead

Date Release Last Expected*
19/2/19 UK Average Weekly Earns. 3M/YoY 3.4%  3.5%
19/2/19 UK Unemployment Rate 4.0% 4.0%
22/2/19 EU CPI YoY 1.6% 1.4%

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7197 +7.03%
S&P 2745 +9.53%
EUROSTOXX 3182 +6.15%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1275 AUD/USD 0.7090
GBP/USD 1.2800 USD/AED 3.6730
GBP/EUR 1.1350 GBP/AED 4.7000
USD/CHF 1.0065 EUR/AED 4.1415
USD/JPY 110.35 XAU/USD 1314

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.86725% 2 year 1.04%
6 month 0.98975% 3 year 1.09%
12 month 1.12938% 5 year 1.18%


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