Update -

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

20th November 2020

Category

Macro Commentary

UK data this week has been relatively robust, with inflation nudging up to 0.7%, though still well below the Bank of England’s 2% target.

EU inflation remained at -0.3% and will likely remain in negative territory through Q1 next year.

ECB head Lagarde said yesterday that they will deliver another round of policy easing at next month’s meeting but urged governments to increase fiscal stimulus to further support weak demand.

The virus infection rate continues to grow alarmingly, with the tough lockdown measures further weakening the economy and increasing government debt.

However, we have had further positive news on vaccines this week, and the market remains optimistic.

Little tangible news out of the Brexit negotiations this week with time running critically short. We may get an announcement in the coming days, with an agreement very much in both sides’ interests, especially with the economic challenges of the pandemic, but a deal remains very much in the balance.

On the exchanges, we have seen consistent demand for sterling on hopes that a Brexit deal would be reached, though conviction levels remain extremely low. Any Brexit news will be key to the fundamental direction of sterling in the coming weeks and months.

GBP/USD again tested, and failed, at 1.3300 before drifting back towards 1.3200. There remains significant selling interest ahead of the critical 1.3500 level, whilst 1.3000 will provide initial support.

GBP/EUR remains in a relatively tight range, with initial support at 1.1000, but continuing to struggle above 1.1250.

GBP/USD – 1-year chart

Week Ahead

Date

Release

Last

Expected*

23/11/20

UK Markit Manufacturing PMI SA

53.7

 50.0

23/11/20

UK Markit/CIPS Services PMI

51.4

 42.5

23/11/20

UK Markit/CIPS Composite PMI

52.1

 44.1

25/11/20

US GDP Annualised QoQ

33.1%

33.1%

20/11/20

UK Retail Sales YoY

4.7%

 4.0%

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.1870

AUD/USD

0.7285

GBP/USD

1.3250

USD/AED

3.6730

GBP/EUR

1.1165

GBP/AED

4.8680

USD/CHF

0.9100

EUR/AED

4.3600

USD/JPY

103.85

XAU/USD

1866

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6333

-16.03%

S&P

3581

+10.87%

EUROSTOXX

3451

-7.85%

DFM GENERAL INDEX

2316

-16.21%

UK Benchmark Rates

Libor

 

Swap Mid

 

3 month

0.04713%

2 year

0.09%

6 month

0.06150%

3 year

0.16%

12 month

0.13550%

5 year

0.27%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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Weekly

Treasury Market Commentary

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