Market News & Insights
12 September 2018

A New Hope

It’s been a mixed start across the board for the G10 currencies, with sterling grabbing most of the headlines in recent weeks. Juncker gave fresh hope to Britain yesterday after stating that a deal is ‘realistic’ in November. Whilst both sides still need to resolve key issues, the EU is now preparing to schedule a meeting in mid-November for all 27 leaders to formally agree to the terms of leaving the bloc. Despite however the positive headlines and overall position from the EU, Theresa May is still facing another threat from inside her own government and party. A group of around 50 Tories spent hours yesterday plotting the best method to oust the PM as they believe she is not delivering what the small majority of the UK voted for – a clean break from the EU.

The gains and losses have been relatively muted from any Brexit news against the single currency in particular as the bloc will still be heavily affected once the UK have officially left the union. For Europe though, there is not just Brexit to focus on, there is more disharmony building within the Eurozone after the Hungarian Prime minister Orbán has been using an aggressive anti-immigrant rhetoric to fuel his popularity within his own country, and this in turn has become increasingly unpopular with the EU. Now there are signs that within the EU there is an west-east divide building that threatens to deepen quickly, which is bad timing for the upcoming summit on how to tackle migration in Salzburg as well as the bloc’s next long-term budget meeting.

This morning we’ve had more bad news from Turkey with President Erdogan naming himself as Chairman of Turkey’s Wealth Fund, whilst in the process he has managed to get rid of the entire management team that had been there for 2 years. The fund was formed after the failed coup attempt but Erdogan has been very disappointed about the lack of progress the fund has made. This will be worrying for investors and will do no favours for the Turkish lira in the short term.

For today, the only major news will be from the US with two pieces of data. At 1.30pm producer price index data should see a slight increase from 0 to 0.2%. Later this evening, Fed member Bostic is speaking which should give us some indication on where we stand on interest rates this year – which is scheduled for one further hike this year.