Newsletter – 12th February 2019

Morning Bulletin


  • Trading kicked off yesterday morning with a raft of UK economic data and it painted a fairly bleak picture with all readings worse than expected.
  • The headline GDP print revealed that the UK economy declined in December, dropping -0.4% on a m/m basis. That meant the economy expanded by just +0.2% in the final quarter of 2018, with car manufacturing and steel products seeing particularly steep falls and also a decline in construction. Overall growth in 2018 hit +1.4%, that again was down from +1.8% in 2017 and represented the slowest economic growth since 2012.
  • The disappointing UK data didn’t stop there:
    • Manufacturing Production m/m -0.7% (+0.2% Exp)
    • Prelim Business Investment q/q -1.4% (-1.3% Exp)
    • Construction Output m/m -2.8% (+0.2% Exp)
  • The Pound fell in FX space in the immediate aftermath of the data, but continued to struggle for the remainder of the day’s trading against a number of its counterparts.
  • The Pound retreated from a day’s high of 1.2940 to close down at 1.2850 against the US Dollar.
  • Losses were however fairly limited against the Euro, having opened around the low 1.1400’s the rate closed the day at the 1.1400 mark.
  • The Euro was also under pressure however following comments from ECB Vice President Luis de Guindos:
    • Eurozone data has been weaker than expect in recent months
    • Inflation is likely to decline further based on market forecasts for oil prices
    • Benchmark interest rates are likely to remain at present levels to the end of this summer at least
  • According to a Sky political correspondent two sources from separate Government departments have said they are starting planning for a customs union type deal since Corbyn’s offer despite the PM’s public dismissals of the idea.
  • White House Adviser Conway said yesterday afternoon that the US and China were getting closer to a trade deal and that there was a possibility of Trump and President Xi meeting soon.

  • Reports overnight that the Democrats and Republicans have reached an agreement in principle over border security that would prevent another partial shutdown of the US Government. The agreement is believed to contain only a fraction of the funding President Trump has been demanding for his border wall. The deal does still need to be approved by Congress and signed off by Trump.
  • According to the Guardian, UK PM Theresa May will ask the commons to allow her a further two weeks grace in order to allow her to push the EU for changes to the Irish backstop.
  • US NFIB Small Business Index 101.2 (103.2 Exp)
  • New Zealand Inflation Expectations q/q 2.0% (2.0% previously)
  • Japan Tertiary Industry Activity m/m -0.3% (-0.1% Exp)
  • Pretty quiet on the data front today.
  • UK PM Theresa May is due to give the commons an update on her recent Brexit talks, following her visits to Brussels and Dublin.


Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1402 -0.03
GBP/USD 1.2845 -0.06
EUR/USD 1.1265 -0.09
AUD/USD 0.7079 +0.25


Time (GMT) Region Data Release Forecast Previous
11.00 USD NFIB Small Business Index 103.2 104.4
13.00 GBP BOE Gov Carney Speaks
15.00 USD JOLTS Job Openings 6.89M
17.45 USD Fed Chair Powell Speaks