Macro Commentary

Brexit uncertainty continues to dominate, with little progress this week, despite parliament holding indicative votes and May offering to resign.

The prime minister still hopes to get her deal passed, but failing that, further parliamentary indicative votes seem likely next week – although much remains unclear, and any breakthrough remains elusive for now.

On the exchanges, volatility remains high, whilst market conviction remains low. The uncertainty has begun to weigh on sterling over the last few days.

GBP/USD has dropped below 1.3100, although we continue to expect strong buying interest ahead of 1.3000. On the topside, the recent high around 1.3350 is the initial level to watch.

GBP/EUR is holding up relatively well on a generally weaker Euro, but has dropped from the recent high of 1.1800. Strong buying interest remains ahead of 1.1300.

The evolving Brexit story continues to dominate the headlines and market sentiment, and next week is again set be critical to the outcome.

GBP/EUR – 1-year chart

Week ahead

Date Release Last Expected*
1/4/19 UK PMI Manufacturing SA 52.0  51.3
1/4/19 EU CPI Estimate YoY 1.5% 1.5%
2/4/19 UK Markit/CIPS Construction PMI 49.5 49.7
3/4/19 UK Markit/CIPS Services PMI 51.3 51.0
3/4/19 UK Markit/CIPS Composite PMI 51.5 51.2
5/4/19 UK Halifax House Prices 3Mths/Year 2.8% 2.3%

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7234 +7.99%
S&P 2815 +12.31%
EUROSTOXX 3320 +11.17%
DFM GENERAL INDEX 2631 +3.99%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1225 AUD/USD 0.7090
GBP/USD 1.3025 USD/AED 3.6730
GBP/EUR 1.1605 GBP/AED 4.7850
USD/CHF 0.9960 EUR/AED 4.1230
USD/JPY 110.80 XAU/USD 1290

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.83325% 2 year 0.94%
6 month 0.95825% 3 year 0.98%
12 month 1.06188% 5 year 1.05%

London

+44 (0)20 7012 2599
DG-FX@arbuthnot.co.uk

Dubai

+971 4 377 0902
dubai@arbuthnot.co.uk

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.

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.