Newsletter – 4th May 2018

Morning Bulletin

Yesterday

  •  Despite some respite on Wednesday, sterling lost further ground on the euro yesterday falling from 1.1350 to 1.1321.
  • GBP/USD has reached the 1.3550 support level and briefly fell to a low of 1.3538 before closing at 1.3572.
  • In a briefing to the Cabinet sub-committee earlier this week, senior civil servants said that highly complex new technology will be needed to operate UK borders after Brexit and this technology may not be available for another five years – meaning that Britain may be unable to leave the customs union before 2023 (The Telegraph)
  • The National Institute of Economic and Social Research (NIESR) has cut its UK growth forecast for 2018 to 1.4% from 1.8% after official figures showed the economy grew just 0.1% in the first quarter. 
  • NIESR economist Amit Kara said that the uncertainty will likely delay the Bank of England from raising rates until August and then roughly every 6 months thereafter.
  • UK services PMI came in softer than expected at 52.8 vs 53.5.
  • From the Eurozone we saw CPI flash estimate y/y and core CPI flash estimate y/y both comes in weaker than expected at 1.2% vs 1.3% and 0.7% vs 0.9%, respectively.
  • Canada’s trade balance came in weaker at -4.1B vs -2.3B whereas in the states unemployment claims came in better than expected at 211K vs 225K expected.
  • ISM non-manufacturing PMI came in soft at 56.8 vs 58.1.

Overnight

  • The English local election results have been coming in overnight with both Labour and the Conservatives losing key councils. Labour missed out on key targets in including Wandsworth but won back Plymouth. The Tories won Barnet and due to a collapse in UKIP’s vote, won Basildon and Peterborough (BBC News).
  • Labour picked up one seat in Kensington and Chelsea but the Conservatives remain in control there but lost Nuneaton and Bedworth after the Conservatives took eight of their seats.
  • Polling expert Sir John Curtice said that the Tories were performing well in in areas that had a substantial ‘Leave’ vote in 2016 whereas Labour are performing well in areas that had a substantial ‘Remain’ vote. (BBC).
  • Caixan Services PMI from China came in at 52.9 vs 52.2 expected.

Today

  • Sterling has gained 0.10% on the euro this morning but is struggling to gain any momentum against the US dollar.
  • At 1.30pm we expect to find out the latest average monthly earning m/m figure from the US along with the non-farm payrolls figure and unemployment rate.
  • The payrolls figure is expected to be 190K whereas the average hourly earnings and unemployment rates are estimated to be 0.2% and 4.0%, respectively.
  • From 5pm we have FOMC members Dudley, Williams, Quaries and Bostic speaking in various locations across the country.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1333 +0.11
GBP/USD 1.3575 +0.02
EUR/USD 1.1965 -0.19
AUD/USD 0.7523 -0.10

 

Time (GMT) Region Data Release Forecast Previous
13:30 USD Average Hourly Earnings m/m 0.2% 0.3%
13:30 USD Non-farm Employment Change 190K 103K
13:30 USD Unemployment Rate 4.0% 4.1%