Newsletter – 21st August 2019

Morning Bulletin


  • Economic data was fairly thin on the ground yesterday, but that didn’t prevent some see-sawing in Sterling exchange rates.
  • Sterling was on the back-foot in early trading as Boris Johnson’s letter to the EU calling for the removal of the Irish backstop fell on deaf ears, with the European Council President Donald Tusk reiterating that unless a ‘realistic’ alternative was put forward by the UK the clause could not be removed from the withdrawal agreement.
  • The pound traded to a day’s low of 1.0887 and 1.2064 against the Euro and US Dollar respectively around midday.
  • Those lows and early losses were quickly eradicated however just a couple of hours later following comments from German Chancellor Angela Merkel. Ms Merkel suggested a solution to the Irish border could be possible but said that it would not be achieved by reopening the withdrawal agreement. Ms Merkel said the EU was ready to find a solution, and that when one is found it could be done so in a short period of time.
  • Following Chancellor Merkel’s comments the Pound rallied in FX space, going from negative on the day to closing up +0.10% against the Euro at 1.0957 and up +0.30% against the US Dollar, trading at 1.2161.
  • The recent downturn in UK manufacturing eased a little this month according to the CBI. Their Industrial Order Expectations reading was at -13 in August, that was up from -34 in July and better than the -25 that was expected. CBI Dep Chief economist Anna Leach said that whilst there was stabilisation in the data this month, UK manufacturers were still on the receiving end of a double whammy made up of slowing global growth and Brexit uncertainty.
  • Canada Manufacturing Sales m/m -1.2% (-1.8% Exp).
  • New Zealand Global Dairy Trade Index -0.2% (-2.6% previously).

  • San Francisco Fed President Mary Daly said the US Central Bank’s decision to cut rates in July was not a result of an impending downturn in the economy, more an appropriate recalibration of policy in response to economic headwinds. Daly said when looking at the data coming in, she sees solid domestic momentum that would point to a continued expansion in the economy.
  • UK Prime Minister Johnson has reportedly told UK diplomats to reduce contact with their EU counterparts in 10 days time to free up more manpower for Brexit.
  • Australia MI Leading Index m/m 0.1% (-0.1% previously)
  • Canadian Inflation data will be the headline print today, with CPI reading due at 1.30pm.
  • UK PM Boris Johnson will be travelling to Berlin to meet German Chancellor Angela Merkel as he seeks to convince EU leaders that the backstop be scrapped to avoid no-deal exit.


Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.0935 -0.24
GBP/USD 1.2131 -0.27
EUR/USD 1.1092 -0.06
AUD/USD 0.6777 +0.01


Time (GMT) Region Data Release Forecast Previous
09.30 GBP Public Sector Net Borrowing -3.7Bn 6.5Bn
13.30 CAD CPI m/m 0.1% -0.2%
15.00 USD Existing Home Sales 5.41M 5.27M
19.00 USD Federal Reserve Meeting Minutes