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Migration deal over the line

29-Jun-2018

The world outside these four walls the big news is that EU leaders managed to come to an agreement in the early hours of the morning on how to deal with rescued migrants.

Latest Rates
GBP/USD
GBP/EUR
GBP/AUD
GBP/CAD
GBP/CHF
1.3112
1.1274

1.7747

1.7339 1.3043
GBP/JPY
GBP/HKD
GBP/ZAR
EUR/USD
EUR/GBP
145.02 10.2883 17.9717 1.1631 0.8870
Investec currency forecasts as at 1 May 2018
Q2'18 Q3'18 Q4'18 Q1'18
GBP/USD 1.33 1.39 1.40 1.41
GBP/EUR 1.14 1.15 1.15 1.14
Data releases
09:30 UK Final release of Q1 GDP
10:00 EU CPI for June
13:30 US Core CPE (inflation)

Key Levels
Support
Resistance
1.3040 1.3472
1.1151 1.1520

Market overview

It has to be a good morning when your boss is putting his hand in his pocket and shouting for breakfast. Good times here at Investec FX HQ.

The world outside these four walls the big news is that EU leaders managed to come to an agreement in the early hours of the morning on how to deal with rescued migrants. The summit came close to collapse after Italy threatened to veto the conclusion of the summit’s entire agenda if migration wasn’t addressed. Under the agreed accord, migrants rescued at sea will be sent to “controlled centres” across the bloc which will serve to distinguish between refugees in need of international protection and “irregular” asylum-seekers who would be sent back. Originally, France and Italy had pitched a more ambitious plan, though this was watered down to make such centres voluntary in a concession to central European states who opposed compulsory quotas for refugees. Though the euro strengthened after the deal was announced, it isn’t clear at this stage whether it will be enough to defuse a political crisis between German Chancellor Angela Merkel and her CSU coalition partners. In terms of Brexit discussions, these are set to get underway today. Reports suggest talks will start at a later-than-scheduled 11:00am due to the late finish of the migrant debate.

In the UK, we heard from Bank of England economist Andy Haldane yesterday, the man who dumfounded the market last week with his vote to increase rates. The man himself was surprised by the reaction saying that it should not be considered “surprising or radical”. He mentioned that he saw rising pay pressures and that he likely would have voted for an increase in May, a month earlier, had the economic data been better. Since then he commented that the data on the consumer had “virtually without exception” bounced back as he had expected. This is an interesting one a recent surveys from both the Bank of England and the European Commission had consumer confidence hitting recent lows. Finally, he marked himself as something of pragmatist by saying that there would always be some data that disappoints. He commented “But waiting for something to turn up is not a prudent strategy in life. And waiting for everything to turn up is certainly not a prudent strategy for monetary policy”.

It’s got to the fourth paragraph and we haven’t mentioned Brexit yet, hurrah! If of interest, U.K. Prime Minister Theresa May accused the European Union of putting the safety of its 500 million citizens at risk by blocking a broad Brexit deal on security, as the atmosphere surrounding negotiations soured. At the EU Summit yesterday Theresa May made her case that the UK wants to be have a voice which is heard after it leaves the bloc but commented that “Our ability to do so is being put at risk”.

The day ahead

The weekend isn’t quite here so before you get ahead of yourself have a think about what is to come. We get a slew of UK data points at 09:30 with the focus on the final reading of Q1 GDP. This is expected to come in at 0.1%, the same as the previous reading. We also get the latest European inflation figure for the month of June at 10:00. Finally across the pound we get the latest reading of the Core Personal Consumption Expenditure Index at 13:30 which the Fed’s favourite measure of inflation. Then the Chicago Purchasing Managers’ Index and Michigan Consumer Sentiment Index at 14:45 and 15:00 respectively.

As always, enjoy the weather, the football, and some well-deserved R&R.

Thought of the day

So it turns out the most interesting thing on ITV last night wasn’t the hotly anticipated world cup match between England and Belgium, it was in fact the show that came after the game; Good Evening Britain. News anchors Piers Morgan and Susannah Reid were trying their hand at an evening talk show that covered the World cup, Love Island, Brexit and everything in between! It also featured the most diverse panel of guests you’re likely to see who included Jeremy Corbyn, Pamela Anderson, Danny Dyer and Ed Balls! Here at Investec we embrace diversity; diversity in our staff and in our clients. Our clients range from huge multinationals to small owner managed businesses, who require currencies that range from Dollars to Brazilian Reals, and trade a set of products which range from forwards to outperformance solutions. So regardless of your business need, risk appetite or currency of choice Investec have you covered!

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