Good morning,

GBP: Plan B or no plan B?

Last Friday’s UK retail number revealed the retail sector had shrunk by -0.2% in the final quarter of 2018. Waning consumer confidence, coupled with slower consumer credit take-up and wider ‘Brexit’ fears, is likely to push further downward pressure on the retail sector throughout 2019 too.

Today’s focus will be on Theresa May’s Brexit plan B. Reports from Sunday’s cabinet meeting suggests that there are limited chances of cross-party discussions or meetings and that the PM will directly deal with the EU to seek changes on the Irish backstop. The European Union’s position on renegotiating has been made quite clear and on a number of occasions, which will keep the levels of uncertainty and market jitters flowing.

USD: Public Holiday

The US markets are offline for Martin Luther King Day, and there is very little economic data of note.

The expectations that the US/China trade deal is nearing a close has seen the S&P400 finish 7% up since the start of the year. On the other side of the coin, Chinese GDP (released overnight) for Q4 revealed their slowest expansion since 2009.

Donald Trump made some slight amendments to his Mexican Wall proposal but this was rejected by the Democrats, meaning the Government shutdown remains firmly in place. There are also active talks for a second meeting in February with North Korea’s President.

Have a great day.