Treasury Market Commentary

Macro Commentary

There appears to be some progress towards a Brexit agreement, though fisheries apparently remains unresolved. Talks continue as we move perilously close to the definitive deadline, with the EU demanding a conclusion to the debate this weekend.

UK data this week has been mixed, with the jobs market actually better than expected, but inflation weaker at just 0.3%.

The Bank of England met yesterday and kept interest rates unchanged as expected.

In the US, there are increased hopes that a deal can soon be agreed on the next stimulus package aimed at supporting the economy through the pandemic.

The US central bank also kept their monetary policy unchanged, with rates expected to remain at record lows for the foreseeable future.

On the exchanges, the dollar has fallen to its lowest levels since mid-2018, with sterling and Euro both pushing higher.

GBP/USD has broken above the significant 1.3500 level on hopes that a Brexit deal is close. The next major target is 1.3700.

GBP/EUR continues to find buying interest at 1.1000 but remains within the well-established range of 1.0800 – 1.1300.

Market volatility remains high, with reduced liquidity as we move towards the Christmas holidays.

We wish all our clients a Merry Christmas and a happy and prosperous 2021!

GBP/USD – 1-year chart

Week Ahead

*Bloomberg survey / Not available

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