Newsletter – 17th December 2018

Morning Bulletin


  • Following Thursdays ECB press conference, in which President Mario Draghi said economic risks to the Eurozone were tilted to the downside, Friday morning saw both Eurozone Manufacturing and Services PMI’s fall short of expectations. In fact the Manufacturing reading of 51.4 was a 31-month low, whilst the Services print of 51.4 represented a 49-month low.
  • Unsurprisingly the Euro was one of the weaker performers in FX space Friday morning.
  • The Pound certainly didn’t fare any better than the Euro on Friday, with Sterling closing Friday’s trading down against all of its major currency counterparts.
  • Sterling was down -0.70% against the US Dollar at 1.2570, and fell just shy of 1.0% against the Yen at 142.44.
  • Once again Brexit was the force driving the Pound down. Having dashed across to Brussels yet again, with renewed optimism of some concessions in a bid to get her Brexit Deal through Parliament, UK PM Theresa May seemingly came back empty handed.
  • The PM said she was crystal clear with EU Leaders, telling them she need assurances on the backstop and that is what she would seeking in the coming days. However according to the Times, EU Leaders reneged on an earlier agreement made to assist the PM win over Parliament. British negotiators had agreed a draft statement with Senior EU officials which could have gone some way to demonstrating to MP’s that the bloc was prepared to compromise on the backstop. However the European Leaders are reported to have gone back on that agreement in order to send a statement to the UK that no further concessions will be made.
  • That rhetoric was also clear from EU Council President Donald Tusk, who speaking Friday afternoon said that he had no mandate to reopen Brexit negotiations.
  • US Retail Sales m/m 0.2% (0.1% Exp)
  • US Industrial Production m/m 0.6% (0.3% Exp)
Over The Weekend

  • UK Rightmove HPI m/m -1.5% (-1.7% Previously)
  • UK PM Theresa May is set to state her firm opposition to a second referendum to the commons later today. The PM will tell fellow politicians that a second vote would ‘break faith’ with British people and ‘irreparably damage’ politics.
  • Mrs May’s opinion was echoed by one of her cabinet ministers Dr Liam Fox who was speaking on the Andrew Marr show Sunday morning. Dr Fox also said that the PM’s deal was unlikely to pass through Parliament unless the backstop issue was resolved.
  • President Macron, having agreed to some of the demands of the French public following riots and unrest in France, now runs the risk of France’s 2019 Budget deficit overshooting the European Union’s limit of 3% of GDP. The deficit is likely to hit 3.4% as a result of the new measures. It will be interesting to see how the EU handles this scenario given the stance taken with the Italian Government.
  • Relatively low key data releases chalked up today. Eurozone Final Inflation and Trade Balance arguably the more high impact of the releases, both due at 10am.


Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1129 +0.01
GBP/USD 1.2593 +0.09
EUR/USD 1.1317 +0.13
AUD/USD 0.7174 -0.01


Time (GMT) Region Data Release Forecast Previous
10.00 EUR Eurozone Final CPI y/y 2.0% 2.0%
10.00 EUR Eurozone Trade Balance 14.2Bn 13.4Bn
11.00 GBP CBI Industrial Order Expectations 6 10
13.30 CAD Foreign Securities Purchases 6.20Bn 7.70Bn
13.30 USD Empire State Manufacturing Index 20.1 23.3
15.00 USD NAHB Housing Market Index 61 60