Market Review - Fundamental Perspective - 26 April 2018

Asian and European equities remained under pressure yesterday amid ongoing concerns over US yields, but US stocks overtook the fears and gained on the back of strong corporate earnings. In FX, the risk off sentiment prompted the USD Bloomberg Spot Index to rise yesterday, before consolidating overnight
GBP came under renewed pressure yesterday with GBPUSD falling to below 1.3930 amid broad-based USD strength. Today the House of Commons will debate on whether the UK should remain in a Customs Union after Brexit. While this is a non-binding vote, it could stoke internal conflicts in the Conservative Party
Our traders currently see GBPUSD support at 1.3920 ahead of 1.3890, while resistance lies at 1.4000 and 1.4150. EURGBP support comes in at 0.8725 ahead of 0.8690 and 0.8620, while resistance is clearly at 0.8800
Today’s focus is on the ECB where Barclays Research expects the MPC to keep its policy on hold and downgrade its 2018 outlook. This is because “activity data have surprised negatively in Q1 18 and global risks cast a longer shadow over the outlook for 2018”; Barclays Research think that “the statement will sound slightly more cautious and the balance of risks less upbeat than in March”
In Turkey, the CBT hiked the LLW O/N lending rate by 75bp at its April MPC meeting, more than the 50bp expected in the Bloomberg survey. The accompanying MPC statement reflects the committee’s increasing concerns about the inflation outlook, one of the major reasons for implementing what it refers to as “measured” tightening

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