Macro Commentary

Another tumultuous week for British politics, with parliament suspended and the commons speaker announcing he will stand down.

The Prime Minister continues to insist that we will leave the EU at the end of October, despite parliament backing a new law to stop us leaving without a deal.

Economically, UK data has actually been remarkably robust, with average earnings hitting an 11-year high of 4% – comfortably above inflation, and unemployment at a record low of 3.8%.

Monthly growth figures were also much better than expected at 0.3%.

In Europe, the ECB eased monetary policy yesterday as expected, by cutting rates further and increasing their QE program, as they aim to stimulate their economy. The ECB are looking to resume asset purchases at €20bn a month starting in November.

On the exchanges, sterling remains volatile as the extreme political uncertainty continues.

GBP/USD recovered strongly from below 1.2000, with the pivotal 1.2500 level now coming into focus.

GBP/EUR is well supported but struggling to make a closing break through the 1.1250 level.

GBP/EUR – 1-year chart

Week ahead

Date Release Last Expected*
18/9/19 UK CPI YoY 2.1% 1.9%
18/9/19 UK RPI YoY 2.8%  2.5%
18/9/19 EU CPI YoY 1.0%  1.0%
18/9/19 US FOMC Rate Decision (Upper Bound) 2.25% 2.00%
19/9/19 UK Retail Sales YoY 3.3%  2.6%
19/9/19 UK Bank of England Bank Rate 0.75% 0.75%

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7344 +9.02%
S&P 3009 +20.05%
EUROSTOXX 3539 +17.98%
DFM GENERAL INDEX 2885 +14.16%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1108 AUD/USD 0.6870
GBP/USD 1.2405 USD/AED 3.6730
GBP/EUR 1.1170 GBP/AED 4.5570
USD/CHF 0.9870 EUR/AED 4.0790
USD/JPY 107.95 XAU/USD 1503

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.77988% 2 year 0.84%
6 month 0.83013% 3 year 0.83%
12 month 0.93713% 5 year 0.82%

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