Macro Commentary

The Prime Minister suffered a defeat on Wednesday night when a bill to stop a no-deal Brexit was passed by the commons, and a vote for an early general election was also rejected, with the opposition only welcoming an election on the terms that the bill blocking a no-deal will stand.

The bill forces the PM to ask for an extension beyond the 31st October deadline if a deal has not yet been agreed with the EU. This bill now sits with the House of Lords after passing all its stages in the commons.

Uncertainty remains extremely high, with many different outcomes still possible.

In the US, the government has imposed further tariffs on Chinese goods, although talks are set to resume in mid-September.

On the exchanges, sterling remains extremely volatile.

The pound plummeted to a 34-year low against the dollar, breaking below 1.2000, before staging a decent recovery as Boris lost the key parliamentary votes.

GBP/EUR dipped to 1.0950 early this week before rallying to 1.1150, following the political developments.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
9/9/19 UK Monthly GDP 0.0% 0.1%
9/9/19 UK Industrial Prod. YoY -0.6% -1.0%
9/9/19 UK Manufacturing Prod. YoY -1.4% -1.0%
10/9/19 UK Average Weekly Earns. 3M/YoY 3.7% 3.7%
12/9/19 US CPI YoY 1.8% 1.7%

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7274 +8.09%
S&P 2976 +18.71%
EUROSTOXX 3491 +16.27%
DFM GENERAL INDEX 2890 +14.22%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1045 AUD/USD 0.6830
GBP/USD 1.2315 USD/AED 3.6730
GBP/EUR 1.1150 GBP/AED 4.5230
USD/CHF 0.9870 EUR/AED 4.0570
USD/JPY 107.00 XAU/USD 1510

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.76513% 2 year 0.71%
6 month 0.80738% 3 year 0.69%
12 month 0.87013% 5 year 0.68%

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