19/01/17 - Major Banks May Move London Jobs To European Cities

GBP

HSBC's chief executive, Stuart Gulliver, has said he is preparing to move 1,000 staff from London to Paris. Furthermore, Axel Weber, boss of Swiss bank UBS, estimated that "about 1,000" of its 5,000 London jobs could be hit by Brexit. These comments underline that many thousands of banking jobs may move. There has been widespread speculation that many financial jobs based in London might migrate to cities in the rest of Europe, such as Dublin, Paris or Frankfurt, so that the banks concerned could continue to offer their services to EU clients. However, London will still remain the global headquarters for HSBC with Birmingham being maintained as its UK headquarters.

This news comes as foreign secretary Boris Johnson said that penalising "escape" was "not in the interests of our friends and our partners". PM Theresa May set out her Brexit strategy, including leaving the EU single market, in a speech on Tuesday.

European Commission President Jean-Claude Juncker promised to work for "good results" from Brexit talks. Meanwhile, the Supreme Court has announced it will give its verdict next Tuesday on the government's legal battle over whether MPs must be consulted before Brexit is triggered.

USD

The dollar edged up on Wednesday as investors bought the greenback, after five consecutive days of selling that put its value against a basket of major currencies at the lowest since Dec. 8. A solid reading on the U.S. consumer price index and industrial output figures that outpaced expectations provided minimal fuel for the greenback, which touched session highs against the yen and euro after the data releases, but ultimately retraced those gains.

The dollar had surged at the end of 2016 on expectations that fiscal stimulus proposed by U.S. President-elect Donald Trump would boost growth and inflation, and lead to a faster pace of U.S. interest rate rises, but it has lost more than 2 percent over the past two weeks. 

Overnight, Janet Yellen said in a speech that the U.S. economy is closing in on the Federal Reserve's goals, giving the central bank the encouragement needed to start reducing the extreme levels of support it has provided over the past decade. Although the economy is ‘close’ to the Fed’s objectives, policy removal is expected to be gradual. Yellen also mentioned that low levels of productivity should keep inflation from spiralling out of control.

Key Announcements

12.45 – EUR : Minimum Bid Rate; Forecast not to change from 0%

13.30 – EUR : ECB Press Conference

13.30 – USD : Building Permits; Forecast at 1.22M against a previous of 1.20M

13.30 – USD : Philly red Manufacturing Index; Forecast at 16.3 against a previous of 21.5

13.30 – USD : Unemployment Claims; Forecast at 252K against 247K