Macro Commentary

The focus this week has been on the US central bank’s minutes, and chairman Powell’s testimony, which indicated a likely 25bp cut in interest rates at the end of this month, and potentially a further cut later in the year.

This in turn helped push US stock markets to fresh highs this week.

UK data has continued its recent run of weakness, however it is politics that continues to dominate the headlines, with the new leader of the conservative party set to be announced on July 23, with Boris Johnson continuing to hold a considerable lead over his rival.

Meanwhile slowing global growth, trade frictions and increased geopolitical tensions are a growing concern for markets.

On the exchanges, sterling remains under pressure on the economic weakness and increased risks of a no-deal Brexit.

GBP/USD dropped below 1.2500 this week, hitting its lowest level since April 2017, before finding a short-term base. We would need a break above 1.2750 to alleviate the short-term negative sentiment.

GBP/EUR remains near its year-to-date lows, and needs a closing break above 1.1300 to gain some upside momentum. Strong buying interest remains ahead of last year’s low of 1.1000.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
16/7/19 UK Weekly Earns. Ex-Bonus 3M/YoY 3.4%  3.5%
16/7/19 UK Unemployment Rate 3.8% 3.8%
17/7/19 UK CPI YoY 2.0%  2.0%
17/7/19 UK RPI YoY 3.0%  2.9%
17/7/19 EU CPI YoY 1.2%  1.2%
18/7/19 UK Retail Sales YoY 2.6%  2.3%

*Bloomberg survey

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1265 AUD/USD 0.7000
GBP/USD 1.2535 USD/AED 3.6730
GBP/EUR 1.1130 GBP/AED 4.6040
USD/CHF 0.9875 EUR/AED 4.1370
USD/JPY 108.40 XAU/USD 1410

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7509 +11.92%
S&P 2999 +19.67%
EUROSTOXX 3496 +16.69%

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.77025% 2 year 0.78%
6 month 0.81388% 3 year 0.80%
12 month 0.89188% 5 year 0.88%


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