Macro Commentary

It has been a week of mixed economic data for the UK, with manufacturing continuing to struggle, whilst the jobs market remains resilient, with wages rising to 3.4%, comfortably ahead of inflation.

The Bank of England meets next week, with the market expecting no change in policy until we have a clearer idea on the outcome of Brexit.

In the US, the central bank also meets next week, and though we do not expect any change in policy this month, the market is pricing in a 70% chance of a rate cut at next month’s meeting.

Meanwhile the ongoing US-China trade dispute continues to be a major concern for global markets.

On the exchanges, despite some dollar weakness on potential US rate cuts, sterling has been the main loser with the ongoing possibility of a no-deal Brexit.

GBP/USD has again failed to break above the pivotal 1.2750 level, but does remain above the 1.2600 support for now, ahead of the much stronger 1.2500 level.

GBP/EUR is currently trading just above 1.1200, its lowest levels since January. There is some very strong buying interest ahead of last year’s lows of 1.1000, but we need a closing break of 1.1300 to alleviate the immediate downside pressure.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
19/6/19 UK CPI YoY 2.1%  2.0%
19/6/19 UK RPI YoY 3.0% 2.9%
19/6/19 US FOMC Rate Decision (Upper Bound) 2.50% 2.50%
20/6/19 UK Retail Sales YoY 5.2%  2.4%
20/6/19 UK BOE Base Rate 0.75% 0.75%
21/6/19 UK Public Sector Net Borrowing 5.0b 3.3b

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7368 +9.21%
S&P 2891 +15.35%
EUROSTOXX 3390 +12.60%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1285 AUD/USD 0.6900
GBP/USD 1.2665 USD/AED 3.6730
GBP/EUR 1.1220 GBP/AED 4.6520
USD/CHF 0.9930 EUR/AED 4.1450
USD/JPY 108.20 XAU/USD 1355

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.78900% 2 year 0.86%
6 month 0.86963% 3 year 0.86%
12 month 0.98588% 5 year 0.90%


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