Newsletter – 21st January 2019

Morning Bulletin

Friday

  • UK Retail Sales were even worse than expected in December with sales falling -0.9% versus November. A decline of -0.8% had been forecast. The data reinforces a survey released last week which suggested Retailers had failed to increase Christmas sales for the first time since the financial crisis a decade ago.
  • Having declined overnight the Pound continued to slump during Friday’s trading as Brexit uncertainty weighed heavily. GBP/EUR fell from around a day’s high of 1.1375 in the morning to close down closer to 1.1300 whilst against the US Dollar dropped from the Mid-1.2900’s down into the high 1.2800’s.
  • The Eurozone’s Current Account surplus narrowed to 20.3Bn in November. That was down from 26.8Bn in October, and quite a distance short of the 24.1Bn forecast.
  • The European Commission has suggested the UK would need to put forward representatives for the next European Parliament should an expected delay/extension to the Brexit process mean that the UK is still a member of the EU past the first sitting of the new assembly on 2nd July.
  • Canada’s Annual Inflation hit 2% in December, far better than the 1.7% rise expected. That was confirmed as inflation fell by just -0.1% on a m/m basis during December having been expected to fall by -0.4%. The Canadian Dollar rallied in FX space as a result.
  • According to the FT, Eurosceptic Tory MP’s have threatened to abstain or even vote against the Government in the commons should Theresa May pursue a softer Brexit with the support of Labour.
  • A Reuters poll of leading economists revealed that the majority of respondents now don’t believe the ECB will raise their deposit rate until Q4 of 2019 and their benchmark interest rate until early 2020. The survey also suggested the chances of a recession have grown.
  • The Bank of Italy have slashed their 2019 GDP forecast to +0.6% from +1.0%.
Over The Weekend

  • Reports over the weekend suggest UK PM Theresa May will seek further concessions from the European Union in order to win over Tory Rebels and DUP MP’s who prop up her Government. Mrs May had invited Labour Leader Jeremy Corbyn to take part in discussions in a bid to break the Westminster deadlock however he and his party refused unless the prospect of a No-Deal Brexit was taken off the table.
  • Such is the desperation of Mrs May there are some reports that she had even looked at how the Good Friday agreement (1998) could be amended in order to help her cause.
  • Working on the assumption the UK will need to delay Article 50, EU Governments are in disagreement over how long any extension should last with some pushing for as much as a year.
  • China GDP q/y 6.4% as expected.
  • China Industrial Production y/y 5.7% (5.3% Exp).
  • German PPI m/m -0.4% (-0.1% Exp).
Today
  • The main focus of today’s trading will of course be UK PM Theresa May’s second attempt at convincing MP’s to back her Brexit deal.
  • No data of note set for release today.
  • Please note it is a US Bank Holiday (Martin Luther King Day).

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1293 -0.31
GBP/USD 1.2843 -0.21
EUR/USD 1.1369 +0.06
AUD/USD 0.7156 -0.05

 

**No Economic data of any note set for release.