Newsletter – 16th November 2018

Morning Bulletin

Yesterday

  • Yesterday was a remarkable day for UK politics and all the focus was on PM Theresa May and her widely-criticised draft Brexit agreement.
    • It all started at 9am when Brexit secretary Dominic Raab resigned from the cabinet stated that he could not back the current draft agreement in good conscience. He praised the Prime Minister but stated that Brexit needs to take a different path and there are ‘fatal flaws’ in the plan. Raab is the second Brexit secretary to have resigned after David Davis.
    • One hour after Raabs departure, Esther McVey who is works and pensions secretary also resigned from the cabinet saying she could not back the agreement and that it threatened the integrity of the United Kingdom.
    • Theresa May then went to the commons where she spent three hours defending her plan. Her Brexit agreement came under intense criticism from the whole chamber including many Conservatives. The general nature of the criticism was that it did not deliver on the promises made to UK public regarding Brexit.
    • PM May maintained that the deal is the best possible deal for the UK and that it was her deal, no deal or no Brexit. Many MPs threw her own words back at her as May has famously repeatedly stated that ‘no deal is better than a bad deal’.
    • Leading Brexiteer Jacob Rees-Mogg submitted a letter of no-confidence in the Prime Minister and Labour leader Jeremy Corbyn called on the Prime Minister to withdraw the draft agreement.
    • Defiant May held a press conference at 6pm in which she again back her plan and said that this course is the best way forward for the UK and she believed it with ‘every fibre of her being’.
    • The SNP complained that the Irish backtop plan give Northern Ireland an unfair advantage over Scotland as should it be actioned, Northern Ireland would effectively be in the single market and the UK.
    • A big complaint regarding the agreement is that to action the Irish backstop it would have to be a joint decision by the UK and EU therefore the UK would still be at the mercy of the EU even after leaving.
    • There were reports last night that environment secretary MIchael Gove had been offered the position as Brexit secretary but had turned it down has he would only take it if he could go back to the EU in an attempt to achieve more concessions. Now it is believed that he is considering his position in the cabinet.
  • Sterling saw huge losses yesterday falling 1.85% against the euro after opening at 1.1485, trading a low of 1.1252 and closing at 1.1273.
  • GBP/USD fell by 1.67% after opening at 1.2984 and closing at 1.2768.
  • US core retails sales came in at 0.7% vs 0.5% expected and retail sales m/m came in at 0.8% vs 0.6% expected.
Overnight
  • New Zealand business manufacturing index came in at 53.5.
Today
  • ECB President Draghi is due to speak at 9.30am in Frankfurt.
  • We have manufacturing sales m/m from Canada at 1.30pm.
  • All eyes will again be on Westminster today as the fall out over the draft agreement continues. The main points of interest are if the PM can maintain the support of her party and who will replace Raab as Brexit secretary.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1267 -0.02
GBP/USD 1.2791 +0.18
EUR/USD 1.1347 +0.19
AUD/USD 0.7265 -0.13
Time (GMT) Region Data Release Forecast Previous
14:30 CAD Manufacturing Sales m/m 0.1% -0.4%