The continued political uncertainty and lack of progress on Brexit are weighing on sterling, with the focus moving towards the EU elections on May 23, following the local elections due May 2.
Next week we get the Bank of England Quarterly Inflation Report, which will provide an update on the Bank’s interest rate expectations.
In the US, the trade talks with China appear to be making further progress, underpinning market sentiment.
US equity markets continue to outperform as company earnings remain robust and the economy remains strong.
US benchmark interest rates are also at their recent highs, despite the Fed indicating no further rate increases this year.
On the exchanges, dollar strength has been the dominating factor.
GBP/USD has broken decisively below the 1.3000 support, hitting its lowest levels since mid-Feb. There is strong buying interest building ahead of 1.2800, whilst 1.3130 becomes the initial topside level to watch.
GBP/EUR has held up relatively well on general Euro weakness.
We expect 1.1800 to continue to hold the topside, with 1.1500 continuing to provide solid downside support.
|1/5/19||UK Mortgage Approvals||64.3k||64.0k|
|1/5/19||UK Markit PMI Manufacturing SA||55.1||53.0|
|1/5/19||US FOMC Rate Decision (Upper bound)||2.5%||2.5%|
|2/5/19||UK Markit/CIPS Construction PMI||49.7||50.1|
|2/5/19||UK BOE Bank Rate||0.75%||0.75%|
|3/5/19||UK Markit/CIPS Services PMI||48.9||50.2|
|3/5/19||US Nonfarm Payrolls||196k||181k|
|Indices||Previous Close||YTD % Change|
|DFM GENERAL INDEX||2787||+10.16%|
UK Benchmark Rates
|3 month||0.82525%||2 year||1.02%|
|6 month||0.94000%||3 year||1.08%|
|12 month||1.08963%||5 year||1.17%|
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