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Positive UK News

06-Jun-2018

After a poor run for quite some time the pound finally had a good day yesterday.

Latest Rates
GBP/USD
GBP/EUR
GBP/AUD
GBP/CAD
GBP/CHF
1.3416
1.1410 1.7562 1.7377 1.3213
GBP/JPY
GBP/HKD
GBP/ZAR
EUR/USD
EUR/GBP
147.67 10.5284 17:1602 1.1759 0.8762
Investec currency forecasts as at 1 May 2018
Q2'18 Q3'18 Q4'18 Q1'18
GBP/USD 1.38 1.39 1.40 1.41
GBP/EUR 1.14 1.15 1.15 1.14
Data releases
09:10 EU Retail PMI
12:00 US MBA Mortgage Applications
13:30 US Trade Balance
Key Levels
Support
Resistance
1.3308 1.3431
1.1306 1.1497

Market overview

After a poor run for quite some time the pound finally had a good day yesterday. The always closely watched Services PMI suggested that growth in the sector grew quicker than expected, igniting talk of another potential rate hike in August. The services PMI hit a three-month high of 54.0, up from 52.8 in April – A figure above 50 representing expansion. However, the commentary released alongside stated that some of the improvement was represented by companies catching up on work after heavy snow earlier in the year.So all in all, despite the decent improvement recorded in the PMI, the possibility that future reports may well pull back means that an August rate hike is by no means a done deal.

The much anticipated meeting between US President Donald Trump and North Korean leader Kim Jong–un will take place in Singapore on Sentosa island and is scheduled to take place on 12th June. The meeting will represent the first ever between a North Korean leader and a sitting US President. Like the UK services PMI, the US non-manufacturing ISM index climbed to 58.6 in May from 56.8 in April, delivering a beat on the 57.6 consensus and pointing to the US non-manufacturing sector expanding at a more solid rate still in mid-month of the second quarter. Note also, that the job openings figures released at the same time were also more solid than expected at 6,698k, up from 6,633k in March and providing another pointer on the strength of the US jobs market. This all points towards no softening in the data which means the plan for US rate rises continues.

The day ahead

After yesterday’s flurry of data releases things do calm a little today with US mortgage application data providing the main highlight although US trade balance data will prove a topical release given all the current talk on tariffs. We also have a number of external MPC members of Bank of England speaking today; Silvana Tenreyro is set to speak at a CBI lunch in Northern Ireland while Ian McCafferty will be on LBC radio for a public Q&A.

Thought of the day

The month of June marks the second year since Great Britain voted to leave the European Union (EU). It has actually been two years! I know, it really does not feel like it has been that long. Two years on and we still have no clarity on what the post Brexit world will look like for the UK. The achievements so far have been an agreement on the divorce bill and a transitional period. But two years on it seems like the Government is still discussing the same issues, the Irish Border and what sort of ‘relationship’ we want to have with the EU going forward… a Customs Union or another special arrangement! They are not easy problems to solve. The EU withdrawal bill is expected to come to the Lower House of Parliament next week Tuesday, 12th June. Will it finally provide us with some clarity on what the future will look like? Time will tell. But in the meantime if you would like to discuss what this will mean for exposure then call the Investec FX team today. 

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