Newsletter – 24th April 2017

Morning Bulletin

Friday

  • On Friday we saw sterling trade within the range established last week following Theresa May’s snap election announcement with GBP/EUR trading between 1.1975 and 1.1920 and GBP/USD remaining between 1.2850 and 1.2750.
  • UK retail sales m/m came in much lower than expected at -1.8% when -0.3%. This caused sterling to weaken very slightly before recovering later in the day to close very close to the open against both the euro and the US dollar – 1.1941 and 1.2806, respectively.
  • The European Central Bank vowed to continue QE in 2017 and committed to leave interest rate structures ‘as they are’ this year.
  • We also saw Canadian CPI come in weaker than expected at 0.2% vs 0.4% and US existing home sales beat expectations at 5.71M vs 5.61M.
  • In a YouGov poll, the Conservatives had a popularity vote figure of 48%, Labour was at 25% and UKIP at 5%.
Over the Weekend

  • Emmanuel Macron has gone through to the second round of the French election where he will come up against far-right leader Marine Le Pen. He won 23.86% of the vote in the first whilst Le Pen took 21.43%
  • Macron is now seen as the favourite to win the run-off on May 7th and we saw euro strength this morning when the markets opened.
  • Macron’s campaign promises funds to cover job-training, a switch from fossil fuels to renewable energy and a modernisation of infrastructure of up to €50bn.
  • Other proposed policies include a substantial slashing of corporation tax and a promised cut in the French jobless rate from 9.7% to 7%.
  • After having closed at 1.1941 on Friday, GBP/EUR opened down at 1.2% at 1.1798 this morning and EUR/USD opened all the way up at 1.0918 before coming off to settle closer to 1.0853.
Today
  • This morning German IFO Business Climate data came in at 112.9 which is a touch better than the expected figure of 112.4.
  • It is a typically quiet Monday on the economic data front with only the US Chicago Fed activity index at 1.30pm and Dallas Fed Mfg at 3.30pm.