Update -

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

23rd April 2021

Category

Macro Commentary

Headline UK inflation ticked up to 0.7% for the year and is expected to push strongly higher in the coming months as we emerge from lockdown, with analysts expecting it to reach the Bank of England’s 2% target by the end of this year.

The jobs market also remains relatively robust, with average earnings up 4.5%, though the data remains distorted by the ongoing furlough scheme, which runs until September.

Retail sales figures this morning were much stronger than expected.

The growth of the virus globally remains a huge concern, despite the ongoing success of the vaccine rollout in the UK.

The data so far following last week’s further easing of lockdown restrictions has been encouraging, and the government remains on course in its roadmap, as we look forward to May 17th for the next major reopening of the economy.

In Europe, the central bank yesterday kept monetary policy on hold as expected and were a little more upbeat on the outlook.

After a poor start, the EU is expected to start catching up with its vaccine rollout in the coming months, with many nations focusing on the critical tourism industry over the summer to kickstart their recovery.

On the exchanges, markets have remained volatile within their recent ranges.

GBP/USD has found a short-term base at 1.3700 and rallied to 1.4000 where it met some strong selling interest as expected, swiftly dropping back to 1.3850.

GBP/EUR had some decent buying interest below 1.1500 but failed to gain a foothold above 1.1600 with market conviction remaining low.

GBP/USD – 1-year chart

Week Ahead

Date

Release

Last

Expected*

28/4/21

US FOMC Rate Decision (Lower Bound)

0.0%

0.0%

29/4/21

US GDP Annualised QoQ

4.3%

6.5%

30/4/21

EU Unemployment Rate

8.3%

n/a

30/4/21

EU CPI Estimate YoY

1.3%

n/a

30/4/21

EU GDP SA YoY

-4.9%

n/a

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.2035

AUD/USD

0.7730

GBP/USD

1.3860

USD/AED

3.6730

GBP/EUR

1.1520

GBP/AED

5.0910

USD/CHF

0.9165

EUR/AED

4.4210

USD/JPY

107.90

XAU/USD

1785

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6938

+7.40%

S&P

4134

+10.09%

EUROSTOXX

4014

+13.00%

DFM GENERAL INDEX

2625

+5.07%

 

UK Benchmark Rates

Libor

 

Swap Mid (SONIA) ss((SONIA)

 

3 month

0.08775%

2 year

+0.10%

6 month

0.11375%

3 year

+0.20%

12 month

0.15875%

5 year

+0.41%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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