Newsletter – 6th February 2019

Morning Bulletin


  • The UK’s dominant service sector was pretty much flat during January, with the PMI reading of 50.1 slipping from 51.2 in December. According to the survey, firms within the services industry were reporting job cuts for the first time in 6 years and falling new orders. The reading of 50.1 was also the lowest since August 2016.
  • The Pound dropped in FX space following the data, and that coupled with ongoing Brexit concerns led to a pretty poor day all around for Sterling:
    • GBP/USD – 1.2945 (-0.70%)
    • GBP/EUR – 1.1351 (-0.40%)
    • GBP/AUD – 1.7898 (-0.77%)
  • Retail Sales in the Eurozone slumped massively in December with sales down -1.6% m/m. That was even worse than the -1.5% decline forecast and followed a +0.8% rise in November. The figure was impacted massively by the sharpest decline in German retail sales for 11 years.
  • The European Commission said they are still waiting to hear UK PM Theresa May’s amended Brexit plan before talks are due to take place in Brussels on Thursday.
  • According to a Reuters report Mrs May has told her top ministers that she will be seeking legally binding changes to the withdrawal agreement with the EU in order to ensure the country could not be trapped indefinitely in the Norther Irish backstop.
  • According to US Fed Member Robert Kaplan the central bank should leave interest rates on hold until the US economic outlook becomes clearer. Kaplan has been flagging the risk of a slowdown in 2019 for months, citing the ongoing trade tensions and slowing global growth as risk factors.

  • The Aussie Dollar has been hammered in FX space this morning following comments from Reserve Bank of Australia Governor Lowe. In his first major speech this year, Lowe revealed that the next move in interest rates could be lower, with a potential rate cut required as the economy is currently weaker than the RBA had expected. This comes just days after the RBA’s monetary policy meeting in which they indicated the next move was more likely to be upwards.
  • At the time of writing:
    • GBP/AUD – 1.8164 (+1.54%)
    • EUR/AUD – 1.5970 (+1.36%)
    • AUD/JPY – 78.19 (-1.71%)
  • Despite Theresa May’s warnings that discussing an extension to the Brexit deadline would be counterproductive, there are reports that her Cabinet Ministers have been meeting in secret to discuss extending the deadline by up to 8 weeks.
  • According to the NIESR the Bank of England could hike interest rates as soon as August this year should the UK secure a smooth exit from the European Union. On the flipside however, if the UK were to crash out with no deal it could be in danger of slipping close to a recession.
  • German Factory Orders m/m -1.6% (0.3% Exp)
  • No economic data due this morning. This afternoon there will be a mix of US and Canadian data set for release.


Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1379 +0.24
GBP/USD 1.2964 +0.15
EUR/USD 1.1393 -0.10
AUD/USD 0.7124 -1.50


Time (GMT) Region Data Release Forecast Previous
13.30 CAD Building Permits m/m -0.9% 2.6%
13.30 USD Trade Balance -54.0Bn -55.5Bn
13.35 CAD BOC Member Lane Speaks
TBC NZD GDT Price Index 4.2%
15.00 CAD Ivey PMI 56.4 59.7