Macro Commentary

Brexit continues to dominate the headlines, with uncertainty remaining high. Boris is calling for an election on the 12th December, but Corbyn won’t back it unless no-deal is taken off the table. The government will also reintroduce the Withdrawal Agreement Bill. Meanwhile, we await the EU’s response to the UK’s request for an extension, and for how long that will be.

In Europe, the central bank kept policy on hold yesterday as expected, though the market does expect further interest rate cuts in Q1 of next year, as they attempt to stimulate stubbornly low growth.

Whilst in the US, though the economy remains resilient, the ongoing trade dispute with China, and slowing global growth mean a further interest rate cut next week is highly likely.

On the exchanges, sterling gave up some of its recent strength yesterday on the heightened uncertainty a general election may cause.

GBP/USD had nudged 1.3000 earlier this week, but has not had the momentum to break through just yet. There is strong buying interest building ahead of 1.2750, whilst a break through 1.3000 would initially target 1.3250.

GBP/EUR, the initial levels to watch are 1.1500 – 1.1700.

However, sentiment will of course be directed by how the political uncertainty over Brexit plays out over the coming days and weeks.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
29/10/19 UK Mortgage Approvals 65.5k  65.1k
30/10/19 US GDP Annualised QoQ 2.0% 1.6%
30/10/19 US FOMC Upper Bound 2.00% 1.75%
31/10/19 EU GDP SA YoY 1.2% 1.1%
31/10/19 EU CPI Estimate YoY 0.9% 0.7%
1/11/19 US Nonfarm Payrolls 136k 95k

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7323 +8.83%
S&P 3010 +20.08%
EUROSTOXX 3613 +20.34%
DFM GENERAL INDEX 2784 +10.04%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1115 AUD/USD 0.6830
GBP/USD 1.2835 USD/AED 3.6730
GBP/EUR 1.1550 GBP/AED 4.7140
USD/CHF 0.9920 EUR/AED 4.0820
USD/JPY 108.65 XAU/USD 1506

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.80513% 2 year 0.78%
6 month 0.87838% 3 year 0.78%
12 month 0.97413% 5 year 0.78%

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