Macro Commentary

Mixed data for the UK this week with wages rising to 3.9%, their fastest pace since 2008, which was offset by unemployment also rising to 3.9%. Meanwhile inflation unexpectedly rose to 2.1%, just above the Bank of England target.

The US announced a delay in further tariffs on Chinese goods, with further talks expected in September.

Whilst in Europe, escalating political concerns in Italy are weighing on the Euro.

On the interest rate front, the market is pricing in a 65% chance of a UK rate cut in Q1, whilst in the US the market expects two further interest rate cuts this year. In Europe, we also look for a further cut in rates next month.

On the exchanges, fairly tight ranges continue with lighter volumes as we hit the peak of the holiday season.

GBP/USD found some support ahead of 1.2000 as expected, but sentiment remains extremely weak.

GBP/EUR has also nudged higher, helped by general Euro weakness. There is decent buying interest building just below 1.0700, but we would need an initial break above the pivotal 1.1000 level to aase the current negative sentiment.

GBP/EUR – 1-year chart

Week ahead

Date Release Last Expected*
19/8/19 EU CPI YoY 1.3% 1.1%
21/8/19 US FOMC Minutes

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7067 +5.04%
S&P 2847 +13.59%
EUROSTOXX 3282 +10.36%
DFM GENERAL INDEX 2795 +10.47%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1085 AUD/USD 0.6780
GBP/USD 1.2120 USD/AED 3.6730
GBP/EUR 1.0940 GBP/AED 4.4525
USD/CHF 0.9790 EUR/AED 4.0715
USD/JPY 106.15 XAU/USD 1515

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.76813% 2 year 0.69%
6 month 0.80163% 3 year 0.66%
12 month 0.84900% 5 year 0.62%

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.