Newsletter – 30th October 2018

Morning Bulletin

Yesterday

  • Yesterday was of course dominated by the UK Chancellor’s budget announcement, however there were a couple of pieces of economic data released beforehand:
  • UK Net Lending to Individuals m/m 4.7Bn (4.1Bn Exp)
  • UK Mortgage Approvals 65K as expected
  • US Core PCE Price Index m/m 0.2% (0.1% Exp)
  • US Personal Spending m/m 0.4% as expected
  • On the political front, there was also a big announcement out of Germany yesterday afternoon as it emerged Chancellor Angela Merkel will not seek re-election as the Chair of her CDU party and that her fourth term as Chancellor would indeed be her last. Merkel and her party have come under increasing pressure in the polls of late.
  • Some of the key takeaways from UK Chancellor Hammond’s Autumn Budget:
    • Whilst the Chancellor remains optimistic a deal will be reached on Brexit, he has set aside a £2Bn contingency for Government departments in the event of a no-deal.
    • Government borrowing will be £11.65bn lower this year than the forecast in the Spring.
    • The OBR has upgraded growth forecasts for the UK:
      • 2019 GDP now at +1.6% (+1.3% previously)
      • 2020 GDP now at +1.4% (+1.3% previously)
    • The Personal allowance threshold is set to rise to £12,500 in April, up from £11,850. Whilst the higher rate income tax threshold will also rise to £50,000, up from £46,350.
    • A new 2% digital services tax will come into force, targeting the UK revenues of big technology companies such as apple and google.
  • The Pound was largely unmoved leading into the Budget but did suffer small losses across the board by the close of trading.
  • GBP/USD continued it’s recent sharp decline, closing the day a fraction under 1.2800, whilst GBP/EUR closed around 1.1240 which was pretty much where it has started the day.
Overnight

  • Speaking overnight US President Donald Trump has said he expected the US to get a great deal with China on trade, but Trump being Trump, added that failure to agree a deal would lead to the US imposing billions of Dollars worth of further tariffs on China.
  • Australia Building Approvals m/m 3.3% (3.9% Exp)
  • Japan Unemployment Rate 2.3% (2.4% Exp)
  • French Flash GDP q/q 0.4% as expected
  • Spanish Flash CPI y/y 2.3% as expected
Today
  • Relatively quiet again today on the economic data front.
  • Key prints will be Eurozone GDP at 10am and US Consumer confidence at 2pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1229 -0.21
GBP/USD 1.2768 -0.19
EUR/USD 1.1369 -0.02
AUD/USD 0.7088 +0.46

 

Time (GMT) Region Data Release Forecast Previous
10.00 EUR Eurozone Flash GDP q/q 0.4% 0.3%
11.00 GBP CBI Realised Sales 27 23
14.00 USD CB Consumer Confidence 136.3 138.4
19.30 CAD BOC Gov Poloz Speaks