Macro Commentary

Increased political uncertainty in the UK is obviously dominating markets. The Prime Minister’s new Brexit offer backfired spectacularly, and she has now confirmed she will resign as Conservative leader on 7 June.

It is now unclear whether the deal will be back for another vote, considering the high likelihood of it failing once again.

The increased risk of a general election, or indeed a no-deal Brexit, is weighing heavily on sterling.

Meanwhile the EU elections are only adding to the Prime Minister’s problems, with the final results due Sunday evening.

Elsewhere, global geopolitical tensions continue to be a concern, with the dollar benefitting from safe-haven flows.

On the exchanges, sterling unsurprisingly continues to break lower. GBP/USD tested 1.2600 yesterday, its lowest level this year. Sentiment remains weak, though we do expect solid buying interest at 1.2500.

GBP/EUR tested its 3-month lows just above the 1.1300 level, with the historically strong support level of 1.1200 now coming into focus.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
31/5/19 UK Mortgage Approvals 62.3k  63.5k
31/5/19 UK Net Consumer Credit 0.5b 0.9b

 

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7231 +8.13%
S&P 2822 +12.58%
EUROSTOXX 3327 +11.64%
DFM GENERAL INDEX 2589 +2.33%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1190 AUD/USD 0.6900
GBP/USD 1.2675 USD/AED 3.6730
GBP/EUR 1.1330 GBP/AED 4.6560
USD/CHF 1.0015 EUR/AED 4.1085
USD/JPY 109.50 XAU/USD 1283

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.79575% 2 year 0.92%
6 month 0.89363% 3 year 0.96%
12 month 1.02388% 5 year 1.02%

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