11 Sep 2018

Market Brief: markets take a breather

Emily Maguire

Dealing team

Currency markets were largely range-bound yesterday with the US on holiday celebrating Thanksgiving.

Today's data release
  Key levels
14:45 US manufacturing, services and composite PMI   Support Resistance
GBP/USD 1.3057 1.3338
GBP/EUR 1.1071 1.1352
Market overview

Currency markets were largely range-bound yesterday with the US on holiday celebrating Thanksgiving. With most extending the celebrations into a long weekend, the markets are likely to remain steady as we head to the final week of the month. Yesterday’s main release was the second estimate of Q3 GDP in the UK where the ONS left growth unrevised at 0.4% q/q. It gave us our first look at the expenditure breakdown of GDP, which showed that the pick-up in growth was largely down to stronger household spending which rose 0.6% q/q in Q3, its strongest performance since the equivalent quarter of 2016, supported by a recovery in car sales which had suffered in Q2 owing to a tax rise. The data was broadly in line with expectations and failed to inspire Sterling to greater heights with the currency topping 1.3330 and 1.1270 against the dollar and euro respectively.

As the December EU summit fast approaches, Theresa May is in Brussels today for further Brexit negotiations, where it is widely expected she will discuss a proposal that would lead to the UK upping its effective divorce payment offer at the December EU Summit. Elsewhere in Europe, the markets are focused on what lies next for the embattled German Chancellor, Angela Merkel. A coalition with the main opposition party seems a likely possibility after a Bloomberg report suggested that German Social Democrat leader Martin Schulz is ready to start talks with Chancellor Angela Merkel and is prepared to offer her limited support for a fourth term. Closer to home, fears are growing that Ireland could be on its way to an early election. The country is facing a political crisis with opposition parties calling for the head of the deputy prime minister over an escalating policing scandal. 

The day ahead

Looking ahead today any comments from Brussels reporting on how Mrs May’s talks are progressing will be of keen interest in what could otherwise be a relatively quiet day. We have a number of ECB officials speaking mid-morning before we cross stateside to where the US will be releasing their Manufacturing and Servcies PMI data.

Thought of the day

Fist fights in your local high street… people sleeping rough on the streets… no it’s closing time on a Saturday. It’s Black Friday! A day that has emerged as a major event in the retail calendar is finally here and many stores would have already traded tens of millions of trade with early opening hours. The estimated spend on Black Friday in 2015 was an enormous $67.6 billion, with 60% of American’s shopping on that day and an average of $403 spent per person over the four day Black Friday weekend. Whilst the day itself is full of festive shopping and a general test on the state of humanity, the implications for economic sentiment are significant. With disappointing US Retail Sales last month and slightly dovish minutes from the Federal Reserve last Wednesday evening, this will be a pivotal event to gauge confidence amongst US consumers and the US economy. Finally, as it’s a Friday we will leave you with a Black Friday funny from a Walmart employee to enjoy… “Back in my poor college days when I worked at Walmart we had a fight break out over a bike. Fists were thrown and there was some blood. Eventually one guy got a hold of it and managed to get away from the crowd, he rode the bike out of the store to flee his pursuers (without paying)!”

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