11 Sep 2018

Market Brief: UK Government limping along

Lewis Thorn

Dealing team

A session in Parliament yesterday followed by PMQs did very little to calm nerves that the prospect of making progress on Brexit at next week’s EU Summit looks to be diminishing.

Today's data release
  Key levels
08:30 Halifax house price   Support Resistance
10:00 EU GDP GBP/USD 1.3220 1.3550
13:15 US initial jobless claims
GBP/EUR 1.1065
16:00 ECB's Mario Draghi speaks      
Market overview

 A session in Parliament yesterday followed by Prime Ministers questions did very little to calm nerves that the prospect of making progress on Brexit at next week’s EU Summit looks to be diminishing. An article in today’s Telegraph today states that EU Commission president Jean-Claude Junker believes Theresa May’s government could collapse within weeks if Brexit talks remain deadlocked. However he will extend the deadline for Mrs May to settle a dispute over the Irish border to the eve of the EU leaders summit next Thursday.

On matters Brexit, it is also very concerning to learn that the UK Brexit Secretary David Davis looks to have misled Parliament. Mr Davis admitted that that the government had not carried out a sector-by-sector analysis of the impact of Brexit on different UK sectors, following months of claiming that the work was ongoing. His admission, to a House of Commons committee yesterday was the culmination of a long parliamentary battle. This really raises questions about the government’s preparedness for Brexit and the whether a Hard Brexit strategy was well thought out. 

The day ahead

This morning Eurozone GDP will take most of the focus with the second estimate for the third quarter is expected at 10am. No change is expected and growth is expected at 0.6% with the annual number coming in at 2.5%. Beyond that the markets will almost certainly start focussing on tomorrows non farm payroll release. However it would seemingly take a catastrophic number to derail the Feds plan to raise interest rates next week it’s still a key release. Yesterday’s ADP employment report came in at 190k, although often criticised for its accuracy at giving an indication of what the main show might bring, it’s still considered one of the best indicators.

Thought of the day

Our thought today comes direct from our trading desk: the biggest non personal cheque ever written was for $9,000,000,000 and was used to keep Morgan Stanley from collapsing in 2008. The investment was made by Mitsubishi UFJ to keep the firm afloat but due to the Columbus Day holiday when banks in the US and Japan were closed, a physical cheque was hand delivered by Mitsubishi’s CEO who had to jump on a plane in Tokyo and fly the cheque over to New York! This is a huge amount of money but is dwarfed by the daily turnover of the global FX market which turns over approximately 5 trillion dollars a day! Even if your business is not likely to be writing a $9 billion cheque in the near future, the uncertainty of the Brexit situation means there is plenty to keep your eye on. If you would like some guidance on what to watch out for in the FX market and what could influence the rates in 2018, give the Investec dealing desk a call on 0800 055 6339.

Discover how our Treasury team can help your business

Live FX graph

Live FX graph



Live FX rates

Live FX rates

  • View important information

    This Market Commentary is provided for information purposes only and should not be construed as an offer, or a solicitation of an offer, to buy or sell any related financial instruments. This commentary has not been prepared in accordance with legal requirements designed to promote independent investment research. The information contained in this commentary has been compiled from sources believed to be reliable but no representation or warranty, implied or not, is provided in relation to its accuracy, suitability or completeness. Any opinions, forecasts or estimates constitute a judgement as at the date of this report and do not necessarily reflect the view of Investec Bank plc ("Investec"), its subsidiaries or affiliates. This commentary does not have regard to the specific investment objectives, financial circumstances or particular needs of any recipient and it should not be regarded as a substitute for the exercise of investors' own judgement. Investors should seek their own financial, tax, legal and regulatory advice regarding the appropriateness or otherwise of investing in any investment strategies and should understand that past performance is not a guide to future performance and the value of any investments may fall as well as rise. This commentary is confidential and may not be disclosed or distributed to any third party without the prior written consent of Investec. Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and a member of the London Stock Exchange. Registered office 2 Gresham Street, London, EC2V 7QP. Investec Bank plc 2014.