Macro Commentary

This week’s Brexit developments confirmed that parliament would get another ‘meaningful vote’ on or before March 12.

If the deal is again rejected, there will be a further vote on whether to leave the EU with no deal, or to delay Article 50.

The prime minister has insisted any delay should be as short as possible, and that there cannot be any further extensions in the future.

The Labour party meanwhile, said they would table a bid for a second referendum when the ‘meaningful vote’ comes back to parliament.

On the exchanges, sterling has continued its recent rally on the reduced chance of a no-deal Brexit.

GBP/USD gained some further momentum, nudging 1.3350, its highest since July last year, with the focus now moving to the March 12 vote.

GBP/EUR rallied above 1.1700 this week, its highest since May 2017. There is some selling interest building at 1.1800, whilst 1.1550 should provide initial support from here.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
4/3/19 UK Markit/CIPS Construction PMI 50.6  50.4
5/3/19 UK Markit/CIPS Services PMI 50.1 50.1
5/3/19 UK Markit/CIPS Composite PMI 50.3  50.1
7/3/19 UK Halifax House Prices 3Mths/Year 0.8% 0.9%
7/3/19 EU ECB Deposit Rate -0.40% -0.40%
8/3/19 US Nonfarm Payrolls 304k 185k

*Bloomberg survey

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1360 AUD/USD 0.7095
GBP/USD 1.3250 USD/AED 3.6730
GBP/EUR 1.1660 GBP/AED 4.8660
USD/CHF 1.0005 EUR/AED 4.1730
USD/JPY 111.90 XAU/USD 1307

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7074 +5.69%
S&P 2784 +11.08%
EUROSTOXX 3298 +10.64%
DFM GENERAL INDEX 2635 +4.15%

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.85200% 2 year 1.12%
6 month 0.99375% 3 year 1.20%
12 month 1.13925% 5 year 1.32%

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