Treasury Market Commentary

Macro Commentary

The ratio of vaccinations to virus cases continues to improve and remains a positive story against a very challenging economic backdrop, ahead of what will be a very difficult budget on March 3rd.

The focus now is on the government’s plans to reopen the economy, with the prime minister due to make an announcement on February 22nd.

The Bank of England effectively ruling out negative rates for at least six months has underpinned sterling and the UK interest rate markets.

UK GDP data this morning showed a 7.8% decline over the past year, the biggest decline since 1709.

In Europe, Mario Draghi, the highly respected ex-head of the central bank, continues his efforts to form a new Italian government, which has been welcomed by the markets.

Whilst in the US, President Biden continues to push for an ambitious new economic stimulus aid package, but they are yet to reach a political consensus on the numbers. Central bank head Jerome Powell reiterated his calls for urgent fiscal support and said interest rates will remain at record low levels for the foreseeable future.

On the exchanges, the dollar remains under pressure across the board.

GBP/USD hit its highest levels since April 2018, breaking through 1.3800, with the hugely significant 1.4000 level the next major target. Strong buying interest remains at 1.3500.

GBP/EUR is currently consolidating around 1.1400, its highest levels since May last year, ahead of the technically important 1.1500 barrier. Further short-term demand is building at 1.1250.

GBP/USD – 1-year chart

Week Ahead

*Bloomberg survey / Not available

Foreign Exchange

Equity Indices

UK Benchmark Rates

View Arbuthnot Latham’s Private and Commercial deposit rates.

This document should be considered a marketing communication for the purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research.  The information given in this document is for information purposes only and is not a solicitation, or an offer to buy or sell any security or any other investment or banking product. It does not constitute investment, legal, accounting or tax advice, or a representation that any investment or service is suitable or appropriate to your individual circumstances.

You should seek professional advice before making any investment decision. The value of investments and the income from them can fall as well as rise. An investor may not get back the amount of money invested. Past performance is not a reliable indicator of future results. Investment returns may increase or decrease as a result of currency fluctuations.

The facts and opinions expressed are those of the author of the document, as of the date of writing and are liable to change without notice. We do not make any representations as to the accuracy or completeness of the material and do not accept liability for any loss arising from the use hereof. We are under no obligation to ensure that updates to the document are brought to the attention of any recipient of this material. Please note that this commentary may not be reproduced, distributed, disseminated, broadcasted, sold, published or circulated without prior consent from Arbuthnot Latham & Co., Limited. Arbuthnot Latham & Co., Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Arbuthnot Latham & Co., Limited DIFC Branch is regulated by the Dubai Financial Services Authority.

Weekly

Treasury Market Commentary

Would you like to receive Arbuthnot Latham’s weekly Treasury Market Commentary directly to your email inbox? Click the button to subscribe to our email newsletters.

Subscribe to our newsletters