Macro Commentary

The escalating US-China trade war is weighing heavily on the market, with US stocks in particular being hit hard.

Trump accusing China of currency manipulation has raised fears of currency depreciation being used in future trade disputes.

There is growing speculation the US may need to cut interest rates more aggressively than is currently priced, which would lead to a weakening of the dollar. We expect a further 0.25% cut next month, potentially followed by another cut in October.

In the UK, retail sales recorded their weakest figures since records began, although UK services data was actually stronger than expected.

Brexit of course continues to dominate the headlines, with nobody so far showing any signs of a shift in position.

On the exchanges, we’ve had fairly tight ranges and lighter volumes as the holiday season kicks in.

GBP/USD continues to see demand below 1.2100 and ahead of critical support at 1.2000, although sentiment remains extremely weak.

GBP/EUR remains well supported at 1.0800 for now, but would need a break above the important 1.1200 level to alleviate the current negative sentiment.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
13/8/19 UK Weekly Earns. Ex-Bonus 3M/YoY 3.6%  3.8%
13/8/19 UK Unemployment Rate 3.8% 3.8%
13/8/19 US CPI YoY 1.7% 1.6%
14/8/19 UK CPI YoY 2.0% 1.9%
14/8/19 UK RPI YoY 2.9% 2.7%
15/8/19 UK Retail Sales YoY 3.8% 2.5%

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7285 +8.07%
S&P 2938 +17.20%
EUROSTOXX 3375 +11.84%
DFM GENERAL INDEX 2837 +12.13%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1190 AUD/USD 0.6810
GBP/USD 1.2130 USD/AED 3.6730
GBP/EUR 1.0840 GBP/AED 4.4540
USD/CHF 0.9750 EUR/AED 4.1100
USD/JPY 106.00 XAU/USD 1501

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.76963% 2 year 0.66%
6 month 0.80038% 3 year 0.62%
12 month 0.83613% 5 year 0.62%

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