Mon, January 23rd, 2017
The Financial Week Ahead
Good morning all
The previous week
All eyes were on Theresa May's speech and Trumps inauguration. GBP received some welcome support from Theresa Mays speech. The PM reiterated her commitment to negotiate a free trade agreement with the EU and thus giving maximum access to the single market. She also continued to affirm the government’s commitment to making the UK a hub for Free trade with other countries around the world. Mark Carney made a speech on Monday in relation to the policy issues effecting the bank of England, which didn't have too much of an effect on the prices, the big move of the week was following Mays speech when GBP/EUR pushed from 1.1280 to levels close to 1.1600. GBP received more support during the week with CPI, Average Earnings/Claimant change all came in positive.
GBPUSD rallied from lows of 1.2040 to highs of 1.2450, As such Sterling found renewed support while uncertainty ahead of Donald Trump’s inauguration saw cable hit an intra-day high of 1.2370. Factors continue to be the main driving force behind currency moves and this was further highlighted last week. Markets saw improved US Housing Starts, Jobless claims, and Philadelphia Fed Manufacturing Survey reading but this did little to bolster the USD as markets focused on incoming president Trump’s inauguration speech.
ECB president Draghi stated last week that the central bank could expand its quantitative easing program if the economic outlook worsens. He also went further advising that ‘risks to the economic outlook remain on the downside’. Following the statement EUR/USD pulled from a low of 1.0595 to reach of 1.0690, while GBP/EUR briefly broke above 1.16, hitting 1.1610 at a peak.
Highs and lows for the week
GBPEUR: 1.1279/1.1612 GBPUSD: 1.2041/1.2453 EURUSD: 1.0470/1.0750
Monday: We will see Mario Draghi speaking today on the ECB interest rates today which could cause slight volatility with the Euro, target levels of 1.1600 may become available.
Tuesday: EU Membership court ruling released at 09.30am, big data which will give us indications on Article 50 and what negotiations agreements
Wednesday: Australian Bank Holiday, Europe releases the IFO German Business climate. Crude oil inventories will be released at 03.30pm
Thursday: Prelim GDP will be released at 09.30am/ US release unemployment claims at 1.30pm
Friday: Finishing the week in America were Advance GDP figures will be released along with core durable goods orders m/m.
This week’s target levels: possibilities of GBPEUR achieving highs of 1.1650, safety nets at 1.1450 will be placed in case we see any adverse swings in the markets. GBPUSD: 1.2500 on the upside and safety nets at 1.2300.
Theresa May is coming under pressure to say whether she knew about a reported misfire of the UK's nuclear weapons system before a crucial Commons vote. The Sunday Times says the missile veered off course during a test in June last year - weeks before the Commons voted to spend £40bn renewing Trident. Questioned by Andrew Marr, the PM refused to say four times if she had known about the test ahead of the vote. The SNP's Nicola Sturgeon called for a "full disclosure" of what happened.
Fact of the Week
One warhead has eight times the explosive power of the atomic bomb dropped on Hiroshima in 1945 which killed more than 140,000 people.
Estimates of the cost of a new Trident range from £25bn to £75bn.
Opponents say that £25bn could pay for 120,000 nurses every year for the next 10 years, capping student top-up fees for the next decade, 60,000 teachers every year for the next 20 years, or 100,000 extra firefighters every year for a decade.
Each silent submarine carries a letter of last resort from the prime minister outlining what Trident operators should do.
17,000 nuclear warheads in the world - we have 180 of them