The US central bank met this week, and kept policy on hold as widely expected. Officials voted to hold their benchmark rate in the range 0% to 0.25%. The committee were, once again, rather downbeat on the outlook for the economy, with the lack of addressing any forward guidance, these lower rates look set for the foreseeable future.
The next round of US government support for the economic recovery is under negotiation, with an announcement expected in the next few weeks.
The dollar has weakened across the board as the US continues to struggle with the virus, ongoing tensions between the US and China and now Trump suggesting a possible delay in November elections.
The Euro continues to benefit from the general view that the EU authorities have handled the crisis better than the US, and will likely recover quicker, helped enormously by the recent agreement on the EUR 750bn recovery fund.
On the exchanges, it remains a theme of dollar weakness.
GBP/USD rallied and broke the 1.3100 barrier, the highest it has been since early March. We have seen an increase in clients buying dollars recently. On the downside, the pivotal 1.2550 level remains the initial support, now trading above 1.31.
GBP/EUR has seen demand ahead of last month’s low of 1.0900, whilst 1.1250 continues to cap the topside, now trading back above 1.10.
EUR/USD meanwhile, hit its highest level since 2018, breaking through the 1.1800 level.
|3/8/20||UK Markit PMI Manufacturing SA||53.6||53.6|
|5/8/20||UK Markit/CIPS Services PMI||56.6||56.6|
|5/8/20||UK Markit/CIPS Composite PMI||57.1||51.7|
|6/8/20||UK Bank of England Bank Rate||0.10%||0.10%|
|7/8/20||US Nonfarm Payrolls||4800k||2000k|
*Bloomberg survey / Not available
|Indices||Previous Close||YTD % Change|
|DFM GENERAL INDEX||2050||-33.95%|
UK Benchmark Rates
|3 month||0.08213%||2 year||0.11%|
|6 month||0.16175%||3 year||0.13%|
|12 month||0.31138%||5 year||0.16%|
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