Macro Commentary

Brexit negotiations have continued this week, with focus on the Irish backstop and Boris taking the initiative to have meetings with key member states of the EU.

Boris met Merkel to urge a review of the Irish backstop plan. This was met with surprising optimism from Merkel, who suggested an alternative could be found whilst working on a regime that keeps to the parameters as set out in the Good Friday agreement.

President Macron seems to have shown less signs of a compromise but stated that whilst the UK’s decision to leave the EU must be respected,  the Irish Backstop is still necessary. He remained confident the UK and EU would find a solution that will not stray too far from the original proposal.

In the US, Trump continues to urge the US Central bank to cut rates by at least 1%. He claimed in a tweet that a strong dollar was hurting other parts of the world but insisted the economy is doing very well despite fears of it falling into recession. Trump also confirmed that he would consider a temporary payroll tax cut in order to help try boosting the US economy. Hints that a deal with China is still a long way off and the US/China trade tension continues.

The positive Brexit news nudged GBP/USD up past the 1.2260 barrier, its highest level this month. Concerns remain for a weaker GBP with expected buying interest below 1.2100.

GBP/EUR hit 1.1050 after promising Brexit talks, a three-week high, and strong buying interest remains ahead 1.0950.

GBP/USD – 1-year chart

Week ahead

Date Release Last Expected*
30/08/19 Mortgage Approvals 66.4k 66.0k

*Bloomberg survey

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1065 AUD/USD 0.6755
GBP/USD 1.2200 USD/AED 3.6730
GBP/EUR 1.1020 GBP/AED 4.4810
USD/CHF 0.9860 EUR/AED 4.0645
USD/JPY 106.65 XAU/USD 1495

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7128 +6.59%
S&P 2922 +16.60%
EUROSTOXX 3373 +12.86%
DFM GENERAL INDEX 2768 +9.61%

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.76088% 2 year 0.71%
6 month 0.79888% 3 year 0.72%
12 month 0.85363% 5 year 0.72%

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.