18 Dec 2017

Market Brief: May hoping for festive cheer

Kevin Musisi

Dealing team

As Christmas fast approaches and the party season gets into full swing, Theresa May will be hoping for some festive cheer after a challenging month so far on the Brexit front.

Today's data release
  Key levels
10:00 EU CPI   Support Resistance
11:00 UK CBI trends GBP/ USD 1.3036 1.3466
15:00 NBA housing market index GBP/ EUR 1.1065 1.1560
Market overview

As Christmas fast approaches and the party season gets into full swing, Theresa May will be hoping for some festive cheer after a challenging month so far on the Brexit front. In an address to Parliament this afternoon, the Prime Minister will set out her plan for how a proposed Brexit transition period will work, stoking a potential new row with the European Union as she tries to keep different factions inside the Conservative Party on her side. In order to appease the divisions within her party, Mrs May will need to find a balance between Britain leaving the EU’s single market and customs union after March 2019 while retaining most of the benefits of membership. After last week’s defeat in Parliament on the EU withdrawal bill, Mrs May certainly needs a turnaround this week.

A very pleased Donald Trump has predicted the US economy is “going to start to rock” when the US tax code is amended after recent senate approval. Lawmakers posted their sweeping 503-page bill on Friday evening after gaining key votes from two Republican senators, including Marco Rubio, who’d threatened to oppose it. Now, with votes planned in the House and Senate by the middle of next week, Trump is closing in on his first major legislative victory. The dollar strengthened on the news to compound sterling’s woes as the currency also finished the week weaker against the euro. A breakthrough in German coalition talks were seen as a real positive as it was revealed that SDP leaders have now backed coalition talks with Angela Merkel’s CDP party. Formal talks are expected to start in January.

The day ahead

On the data front, this week is going to be relatively light - domestically there are four main releases to watch out for. GfK consumer confidence and the public finances are both due on Wednesday. Meanwhile the second revision to Q3 GDP and Q3 current account figures will be published on Friday. Our economists’ forecasts envisage consumer confidence seeing a small improvement to -10, with November public sector borrowing standing at £8.9bn. They also suspect that Q3 GDP will be unrevised at +0.4% (q/q).

Thought of the day

Samson Motors has designed the world’s first flying sports car that can travel at a speed of up to 200 mph and heights of up to 13,000 ft. The Switchblade functions as a normal car and transforms into an aircraft with ease. After a flight, the sports car returns back to driving mode, with the wings safely stowed and protected. It has side by side seating for two, room for fifty pounds of luggage, a wide cabin and the power to weight ratio of a 2017 Corvette. The Switchblade shows a great level on invention in changing times, many businesses are also currently showing some great levels on invention in what are uncertain times for businesses. If you would like to discuss your plans for the year ahead in more detail, or consider some new ideas please call the Investec Dealing Desk on 0800 055 6339.

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