UK economy remains resilient

Macro Commentary

Market sentiment continues to be driven by the outlook for interest rates, the timing and depth of rate cuts, and rising geopolitical risks, which have helped push gold prices to record highs.

The UK economy remains relatively resilient given the fundamental challenges, though stickier wage inflation remains a concern. The market is forecasting 0.75% of rate cuts from the Bank of England this year, starting either June or August.

In the US, central bank chair Powell reiterated there is no rush to cut rates, with forecasters looking for a cutting cycle to begin in June and a cumulative 0.75% priced for this year. The US economy continues to strongly outperform, with data this week driving yields to new year-to-date highs. Today’s US jobs report and next week’s inflation figures are the key drivers of monetary policy and could lead to an increase in short-term volatility.

In Europe, headline inflation came in slightly weaker than expected at 2.4%, reinforcing the probability of aggressive rate cuts from the central bank, starting in June, with almost 1% of cuts expected.

On the exchanges, GBP/USD dropped towards its year-to-date lows this week around 1.2550 where it again found a base, whilst GBP/EUR remains within a tight range around the 1.1700 level.

GBP/USD – 1-year chart

Week Ahead

*Bloomberg survey / Not available  

Foreign Exchange

Equity Indices

Central Bank Key Deposit Rates

UK Benchmark Rates

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.

Weekly

Treasury Market Commentary

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.

Subscribe to our newsletters