Prime Minister May arrived in Brussels yesterday seeking the EU’s assistance to share political and legal assurances with her cabinet, only to leave empty handed once more… Across the channel, ECB’s Draghi kept key rates unchanged and formally announced the end of their Quantitative Easing programme… Price action remained subdued with GBPEUR languishing around 1.1100 but held above 1.26 against the greenback, with the ECB press conference providing investors the chance to close euro positions as growth outlook in the Single State Bloc is forecasted to weaken next year.
Another day of Brexit related mayhem concluded with Theresa May winning a vote of confidence to remain UK Prime Minister for at least one more year… As morning broke yesterday, news filtered into the markets that the 48 letters needed to trigger a vote of ‘no confidence’ against Mrs May were received by the 1922 Conservative Committee, with an official vote to take place later in the evening… Price action saw GBPEUR rally towards 1.1150 with GBPUSD also recovering recent losses above 1.2600 following yesterday’s news with Theresa May winning the vote of confidence by 200 to 117 after a day of intense backroom lobbying at Westminster.
Trump’s mantra of ‘Making America Great Again’ is echoing across the US economy as third quarter GDP growth outpaced market consensus with a print of 3.5%. Consumer spending and businesses increasing their inventories aided the strongest back to back quarters for growth in over two years.
Today’s print was crucial for Trump and the GOP ahead of the Midterm elections as GDP seems to be aligning with the President’s target for 2018, however it could spark the Fed to consider a more aggressive monetary policy.
Balraj Sroya quoted in the Guardian
Mario Draghi stuck to the script again at today’s ECB Press Conference, delivering yet another ‘balanced’ assessment of the eurozone’s economy. The ECB President quelled recent concerns of weaker economic data as merely a slowdown of growth momentum, not a downturn. This aside, the ECB remain committed to ending the central bank’s bond-buying programme come December.
Transitory or not, Draghi and Co. will need to buy themselves more time to distinguish what effect trade wars, Brexit and the recent Italian budget crisis will have on its interest rate hike timeline in 2019.
Anthony Kurukgy quoted in the Guardian