Macro Commentary

Brexit uncertainty continues to dominate, with little progress this week, despite parliament holding indicative votes and May offering to resign.

The prime minister still hopes to get her deal passed, but failing that, further parliamentary indicative votes seem likely next week – although much remains unclear, and any breakthrough remains elusive for now.

On the exchanges, volatility remains high, whilst market conviction remains low. The uncertainty has begun to weigh on sterling over the last few days.

GBP/USD has dropped below 1.3100, although we continue to expect strong buying interest ahead of 1.3000. On the topside, the recent high around 1.3350 is the initial level to watch.

GBP/EUR is holding up relatively well on a generally weaker Euro, but has dropped from the recent high of 1.1800. Strong buying interest remains ahead of 1.1300.

The evolving Brexit story continues to dominate the headlines and market sentiment, and next week is again set be critical to the outcome.

GBP/EUR – 1-year chart

Week ahead

Date Release Last Expected*
1/4/19 UK PMI Manufacturing SA 52.0  51.3
1/4/19 EU CPI Estimate YoY 1.5% 1.5%
2/4/19 UK Markit/CIPS Construction PMI 49.5 49.7
3/4/19 UK Markit/CIPS Services PMI 51.3 51.0
3/4/19 UK Markit/CIPS Composite PMI 51.5 51.2
5/4/19 UK Halifax House Prices 3Mths/Year 2.8% 2.3%

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7234 +7.99%
S&P 2815 +12.31%
EUROSTOXX 3320 +11.17%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1225 AUD/USD 0.7090
GBP/USD 1.3025 USD/AED 3.6730
GBP/EUR 1.1605 GBP/AED 4.7850
USD/CHF 0.9960 EUR/AED 4.1230
USD/JPY 110.80 XAU/USD 1290

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.83325% 2 year 0.94%
6 month 0.95825% 3 year 0.98%
12 month 1.06188% 5 year 1.05%


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