Daily Brief

Daily Brief

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Focus on Parliament - Vote of no confidence on the horizon?

May’s control

A quiet day on the data front means focus on the pound remains fixed on PM Theresa May. There has already been several high profile resignations, as well as a number of Conservative MPs stating a lack of belief in her leadership. Whilst the threshold required to trigger the confidence vote hasn’t been reached yet, with 48 MPs required to submit letters to Sir Graham Brady, Chairman of the 1922 Committee, there are rumours the threshold could be reached as early as this Tuesday – watch this space for an announcement from Sir Brady.

The pound has remained stable at the start of the week despite the continuous rumours of instability in the UK government over its draft Brexit deal over the weekend. Sterling is holding above the 1.28 mark against US Dollar and 1.1250 against the Euro. 

Further unconfirmed news that May is in contact with Brussels off the back of the Brexit draft deal backlash could suggest wiggle room in Brexit concessions. Or, this could be an attempt to convince MP’s the plan is going ahead, regardless. With rumours of letters of no confidence continuing, it is possible nobody is really sure and therefore, market volatility could be the only thing we see for definite as the week progresses. 

Support for a new EU budget

The euro rallied in light of a potential new budget from the French-German axis. However this week is crucial for the Italian budget, with the EU issuing sanctions from possible Wednesday. Such news on the horizon seems to be holding investors back. 

Looking past the potential sanctions, November PMI’s on Thursday could shed some light on how the Eurozone has been performing. Investors will be hoping for a better Q4 performance than Q3’s lacklustre activity. 

FED December rate hike unlikely?

A theme has emerged in the last week of a more conservative re-pricing of the 2019 Federal Reserve policy. Two-year USD swap rates have fallen 15 basis points from the early November highs, fuelled by a number of FOMC members noting the global economic environment shouldn’t be overlooked in policy setting, and even more blatantly, a comment from Federal Reserve Bank of Philadelphia President Patrick Harker on Friday that he wouldn’t support a December rate hike. 

This correction in rates, and subsequently the strength of the dollar may extend into Thursday’s Thanksgiving holiday – a speech today from the FED’s President and CEO John Williams may reinforce the above.

GBP holds this morning despite continuing uncertainty over May’s position

GBP holds this morning despite continuing uncertainty over May’s position

USD dollar slows on the back of potential FED re-pricing

USD dollar slows on the back of potential FED re-pricing

EUR rallies in light of potential new budget from the French-German axis

EUR rallies in light of potential new budget from the French-German axis

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