12 Dec 2017

Market Brief: a 'gentlemen's agreement' for the UK

Sana Hanassi-Savari

Dealing team

We had a quiet day in markets yesterday ahead of the burst of central bank meetings and data later this week.

Today's data release
  Key levels
09:30 UK inflation data   Support Resistance
ZEW survey expectations GBP/ USD 1.3300 1.3660
11:00 US NFIB small business optimism GBP/ EUR 1.1140 1.1565
13:30 US PPI      
Market overview

We had a quiet day in markets yesterday ahead of the burst of central bank meetings and data later this week. In the UK, PM May told Parliament that the UK’s financial settlement offer is conditional on a successful post-Brexit trade deal and Brexit Secretary Davis noted the agreement was “much more a statement of intent than it was a legally enforceable thing”. Bloomberg also noted Foreign Secretary Johnson continues to press PM May for a “hard” Brexit. On the other side, the EU Commission called it a “gentlemen’s agreement”, but caveated that if the UK tried to unpick what it was agreed, it will halt the next phase of talks. Concerns over the Brexit deal caused Gilts to rally and Sterling to weaken. On the other hand, the Bloomberg’s dollar index, DXY, traded near a three-week high as most major currency pairs stayed in narrow ranges before the Fed policy decision Wednesday.

Over in the US, President Trump’s infrastructure plans may be in focus early next year as the White House noted Trump had “a productive meeting” with Transportation and Infrastructure Committee Chairman Shuster where they discussed plans“ for rebuilding America’s infrastructure”. Bloomberg had earlier noted that Trump may be releasing his infrastructure plans in January 2018.

The week ahead

Looking at today’s calendar we have the inflation release in the UK this morning as well as the December ZEW survey in Germany. Over in the US this afternoon, we have the US NFIB Small Business Optimism report. Away from the data, ECB President Draghi is scheduled to speak in Frankfurt. 

Thought of the day

“I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed.” – Michael Jordan, the greatest basketball player of all time. Perhaps these were the words that inspired Theresa May over the last few months as she tried to negotiate the Brexit divorce bill? With the divorce bill now agreed (or so we think!), we certainly hope that Jordan’s take on failure, continues to inspire her as negotiations move on to Brexit’s all-important “game winning shot” - trade. As the year draws to a close, please speak with your Investec FX dealer today to get the latest scoop on Brexit and the next stages of negotiations.

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