Some tangible progress on the US-China trade negotiations has boosted market optimism, with US stocks posting record highs this week. Some decent US earnings figures have added to the positive sentiment.
In the UK, further negative comments from Bank of England officials have driven the probability of a rate cut at the end of this month to 60%, according to the latest Bloomberg survey.
On the data front, UK house prices showed an annual rise of 2.2%, gaining a boost from the Conservatives’ election victory.
Inflation meanwhile, slowed to 1.3%, its lowest level in three years.
Critical data due out next week will likely decide the Bank of England’s actions at the 30th January meeting.
On the exchanges, sterling dropped below 1.3000 against the dollar earlier this week on the increased chances of a UK rate cut, but again we saw consistent demand below that psychological level.
GBP/EUR dropped to the lower end of our 1.1650 – 1.1850 range where we saw some decent buying interest as expected. Conviction levels remain low ahead of the Bank meeting.
|21/1/20||UK Average Weekly Earns. 3M/YoY||3.2%||3.1%|
|21/1/20||UK Unemployment Rate||3.8%||3.8%|
|22/1/20||UK Public Sector Net Borrowing||£4.9b||£4.6b|
|23/1/20||EU ECB Deposit Facility Rate||-0.50%||-0.50%|
|24/1/20||UK Markit/CIPS Servies PMI||50.0||50.8|
|24/1/20||UK Markit Manufacturing PMI SA||47.5||48.5|
|24/1/20||UK Markit/CIPS Composite PMI||49.3||50.3|
|Indices||Previous Close||YTD % Change|
|DFM GENERAL INDEX||2828||+2.31%|
UK Benchmark Rates
|3 month||0.72375%||2 year||0.65%|
|6 month||0.76350%||3 year||0.6%|
|12 month||0.81963%||5 year||0.72%|
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