Update –

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

18th December 2020

Category

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

Date

Release

Last

Expected*

22/12/20

UK Public Finances (PSNCR)

19.8b

 n/a

22/12/20

UK GDP YoY

-9.6%

 n/a

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.2250

AUD/USD

0.7600

GBP/USD

1.3520

USD/AED

3.6730

GBP/EUR

1.1040

GBP/AED

4.9670

USD/CHF

0.8845

EUR/AED

4.5000

USD/JPY

103.50

XAU/USD

1881

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6551

-13.14%

S&P

3722

+15.22%

EUROSTOXX

3560

-4.92%

DFM GENERAL INDEX

2550

-7.74%

UK Benchmark Rates

Libor

 

Swap Mid (SONIA) ss((SONIA)

 

3 month

0.03725%

2 year

-0.01%

6 month

0.03438%

3 year

-0.01%

12 month

0.11150%

5 year

+0.04%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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