Macro Commentary

It has been a relatively quiet week on the markets as we trade within the recent familiar ranges, with global uncertainty remaining high.

US central bank governor Powell played down the prospect of a rate cut next month, however the market still fully expects a cut of at least 0.25%, with a further cut later in the year.

In the UK, Bank of England governor Carney indicated the bank may cut rates if there was a no-deal Brexit. Conversely, a smooth Brexit outcome would likely lead to higher interest rates.

Meanwhile the headlines continue to be dominated by the conservative party leadership race, with the winner set to be announced on July 23.

Market focus for now turns to the G20 summit in Japan, which starts today, with most world leaders in attendance. Particular focus will be on Trump and Chinese President Xi, and whether talks can resume on the ongoing trade dispute.

On the exchanges, conviction levels remain low.

GBP/USD has solid buying interest at 1.2500 but needs to break above 1.2750 to alleviate the short-term negative sentiment.

GBP/EUR remains near its recent lows, and needs a closing break above 1.1300 to gain some upside momentum.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
1/7/19 UK Mortgage Approvals 66.3k  65.6k
1/7/19 UK Markit PMI Manufacturing SA 49.4 49.2
2/7/19 UK Nationwide House Prices NSA YoY 0.6% 0.5%
2/7/19 UK Markit/CIPS Construction PMI 48.6 49.0
3/7/19 UK Markit/CIPS Services PMI 51.0 51.1
5/7/19 US Change in Nonfarm Payrolls 75k 158k

*Bloomberg survey

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1390 AUD/USD 0.7015
GBP/USD 1.2675 USD/AED 3.6730
GBP/EUR 1.1130 GBP/AED 4.6550
USD/CHF 0.9750 EUR/AED 4.1830
USD/JPY 107.65 XAU/USD 1414

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7402 +10.18%
S&P 2924 +16.68%
EUROSTOXX 3442 +14.82%

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.76875% 2 year 0.84%
6 month 0.85400% 3 year 0.85%
12 month 0.95525% 5 year 0.90%


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