Macro Commentary

It has been a week of mixed economic data for the UK, with manufacturing continuing to struggle, whilst the jobs market remains resilient, with wages rising to 3.4%, comfortably ahead of inflation.

The Bank of England meets next week, with the market expecting no change in policy until we have a clearer idea on the outcome of Brexit.

In the US, the central bank also meets next week, and though we do not expect any change in policy this month, the market is pricing in a 70% chance of a rate cut at next month’s meeting.

Meanwhile the ongoing US-China trade dispute continues to be a major concern for global markets.

On the exchanges, despite some dollar weakness on potential US rate cuts, sterling has been the main loser with the ongoing possibility of a no-deal Brexit.

GBP/USD has again failed to break above the pivotal 1.2750 level, but does remain above the 1.2600 support for now, ahead of the much stronger 1.2500 level.

GBP/EUR is currently trading just above 1.1200, its lowest levels since January. There is some very strong buying interest ahead of last year’s lows of 1.1000, but we need a closing break of 1.1300 to alleviate the immediate downside pressure.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
19/6/19 UK CPI YoY 2.1%  2.0%
19/6/19 UK RPI YoY 3.0% 2.9%
19/6/19 US FOMC Rate Decision (Upper Bound) 2.50% 2.50%
20/6/19 UK Retail Sales YoY 5.2%  2.4%
20/6/19 UK BOE Base Rate 0.75% 0.75%
21/6/19 UK Public Sector Net Borrowing 5.0b 3.3b

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7368 +9.21%
S&P 2891 +15.35%
EUROSTOXX 3390 +12.60%
DFM GENERAL INDEX 2633 +4.07%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1285 AUD/USD 0.6900
GBP/USD 1.2665 USD/AED 3.6730
GBP/EUR 1.1220 GBP/AED 4.6520
USD/CHF 0.9930 EUR/AED 4.1450
USD/JPY 108.20 XAU/USD 1355

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.78900% 2 year 0.86%
6 month 0.86963% 3 year 0.86%
12 month 0.98588% 5 year 0.90%

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.