Macro Commentary

Mixed data for the UK this week with wages rising to 3.9%, their fastest pace since 2008, which was offset by unemployment also rising to 3.9%. Meanwhile inflation unexpectedly rose to 2.1%, just above the Bank of England target.

The US announced a delay in further tariffs on Chinese goods, with further talks expected in September.

Whilst in Europe, escalating political concerns in Italy are weighing on the Euro.

On the interest rate front, the market is pricing in a 65% chance of a UK rate cut in Q1, whilst in the US the market expects two further interest rate cuts this year. In Europe, we also look for a further cut in rates next month.

On the exchanges, fairly tight ranges continue with lighter volumes as we hit the peak of the holiday season.

GBP/USD found some support ahead of 1.2000 as expected, but sentiment remains extremely weak.

GBP/EUR has also nudged higher, helped by general Euro weakness. There is decent buying interest building just below 1.0700, but we would need an initial break above the pivotal 1.1000 level to aase the current negative sentiment.

GBP/EUR – 1-year chart

Week ahead

Date Release Last Expected*
19/8/19 EU CPI YoY 1.3% 1.1%
21/8/19 US FOMC Minutes

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7067 +5.04%
S&P 2847 +13.59%
EUROSTOXX 3282 +10.36%
DFM GENERAL INDEX 2795 +10.47%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1085 AUD/USD 0.6780
GBP/USD 1.2120 USD/AED 3.6730
GBP/EUR 1.0940 GBP/AED 4.4525
USD/CHF 0.9790 EUR/AED 4.0715
USD/JPY 106.15 XAU/USD 1515

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.76813% 2 year 0.69%
6 month 0.80163% 3 year 0.66%
12 month 0.84900% 5 year 0.62%


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