Newsletter – 22nd January 2019

Morning Bulletin

Yesterday

  • There was next to no data released over the course of yesterday’s trading with the US also  observing Martin Luther King day.
  • That meant all the focus fell on UK PM Theresa May’s address to the commons yesterday afternoon with the PM set to reveal her ‘Plan B’ on Brexit following the crushing defeat of her first proposed deal. Following all the build up and anticipation, it’s fair to say the whole thing was a non-event, with Mrs May’s new proposal, on the face of it at least, lacking any actual changes or fresh ideas for winning over Parliament.
  • With Labour refusing to meet with the PM over the last few days it seems the PM decided her best course of action would be to try and win over the Eurosceptic MP’s within her own party and those DUP MP’s who had before now propped up the Government. Mrs May appealed to those members by vowing to seek changes to the highly contentious Irish backstop.
  • Despite what appeared to be little change in the Government’s stance on a potential deal the Pound strengthened in FX space following the PM’s address:
    • GBP/EUR pushed into the 1.1300’s, closing the day up +0.17% at 1.1345.
    • GBP/USD similarly traded with a  1.2900 handle, closing the day up +0.25% at 1.2905.
  • One revelation from the PM’s address was the Government’s decision to scrap a £65 fee that was being imposed on those EU nationals who wished to apply for settled status in the UK.
  • Elsewhere yesterday the IMF revised down their Global Growth forecasts for this year and next. 2019 growth was revised down to 3.5% from the 3.7% forecast in October, whilst 2020 growth was revised down to 3.6% from 3.7% in October.
Overnight

  • Amid months of pressure from his own Labour party, opposition leader Jeremy Corbyn has finally endorsed plans to force a second EU referendum.
  • Reports this morning suggest that up to 40 Tory MP’s could resign from the Government if they are banned from voting on a plan to prevent a no-deal Brexit.
  • Japan BOJ Core CPI y/y 0.4% (0.5% Exp)
Today
  • UK data will firmly be in focus this morning. Jobs data in particular will headline with Average Earnings and Unemployment Rate due at 9.30am.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1337 -0.04
GBP/USD 1.2883 -0.06
EUR/USD 1.1359 -0.05
AUD/USD 0.7131 -0.37

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Average Earnings Index 3m/y 3.3% 3.3%
09.30 GBP Public Sector Net Borrowing 1.1Bn 6.3Bn
09.30 GBP Unemployment Rate 4.1% 4.1%
10.00 EUR German ZEW Economic Sentiment -18.8 -17.5
13.30 CAD Manufacturing Sales m/m -0.1%
13.30 CAD Wholesale Sales m/m 1.0%
15.00 USD Existing Home Sales 5.27M 5.32M