Macro Commentary

It has been a volatile start to the year due to concerns over the escalation of the Iran crisis. Gold and Oil have rallied strongly, and markets remaining extremely cautious.

US stocks however, hit new record highs, driven by a 2.1% rise in Apple shares.

The market remains very much focused on the US-China trade negotiations, with hopes of further progress this month.

In the UK, Bank of England governor Carney was very downbeat on the outlook for the economy, both domestically and globally, with the market now increasing the probability of a rate cut in the first half of this year.

The UK government has begun the trade negotiations with the EU, insisting these will not be extended beyond the end of the year, whilst the EU insist that won’t be possible.

On the exchanges, sterling sold off aggressively following Carney’s speech, whilst the dollar has strengthened across the board.

GBP/USD is trading at a 2-week low, but we see continued demand below the 1.3000 level.

GBP/EUR continues to consolidate in a 1.1650 – 1.1850 range.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
13/1/20 UK Trade Balance -£5188m -£2500m
13/1/20 UK Industrial Prod. YoY -1.3% -1.2%
13/1/20 UK Manufacturing Prod. YoY -1.2% -1.6%
13/1/20 UK Construction Output YoY -2.1% -1.4%
14/1/20 US CPI YoY 2.1% 2.3%
15/1/20 UK CPI YoY 1.5% 1.5%
15/1/20 UK RPI YoY 2.2% 2.3%
17/1/20 UK Retail Sales YoY 1.0% 2.4%
17/1/20 EU CPI YoY 1.0% 1.3%

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7602 +0.83%
S&P 3274 +1.36%
EUROSTOXX 3789 +1.20%
DFM GENERAL INDEX 2749 -0.58%%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1100 AUD/USD 0.6870
GBP/USD 1.3050 USD/AED 3.6730
GBP/EUR 1.1760 GBP/AED 4.7950
USD/CHF 0.9750 EUR/AED 4.0750
USD/JPY 109.60 XAU/USD 1552

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.78438% 2 year 0.79%
6 month 0.84925% 3 year 0.81%
12 month 0.94625% 5 year 0.86%

London

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