Daily Brief

Daily Brief

See recent articles

Information deluge

No-deal rate cut not a given

There was no shortage of numbers and news over the last few days.  The Bank of England governor's enigmatic comments about post-Brexit rates, a squillion purchasing managers' index readings, a strong US employment report and (yet) another story that a deal is nigh on Britain's departure from the EU were the ones that drew most attention.

When Mark Carney introduced the bank's Inflation Report on Thursday he was bombarded with questions about post-Brexit monetary policy.  He said people should not assume that a disorderly no-deal cliff-edge departure must lead to lower interest rates. However, an orderly Brexit - which the bank assumes - would mean a faster pace of rate increases.  

The sterling-positive rate story was balanced by the negative news that Downing Street had not, after all, secured an arrangement for UK banks to operate in Europe and a Brexit deal will not be finalised within three weeks.  The debunking of those two stories was less damaging to the pound than might have been expected: investors had got themselves into an upbeat mood and were not inclined to give it up easily. 

Lots of jobs

The US dollar was the top performer on Friday, helped by a good set of employment data.  Not only were a quarter of a million jobs added in October, wages growth accelerated from 2.8% to 3.1% a year.

It was the wages figure that most affected the dollar - the biggest annual gain in more than nine years. Investors figured that it would be another reason for the Federal Reserve to take interest rates another notch higher next month. The dollar added a fifth of a cent against the second-placed pound.

Sterling led the running as the Far East opened this morning. Once again it was The Times that carried the story that a Brexit deal is imminent. Also, again, the prime minister's office played down the idea, calling it "speculation" but investors have begun to believe that there must be something to these stories and that Theresa May is preparing to force a compromise upon her recalcitrant Brexiteers. The pound is an average of 0.9% higher on the week, beaten only by the antipodean dollars and the South African rand.

(Some) services PMIs

The main data today are the services sector purchasing managers' index readings from Britain and the States. Mainland Europe will not be playing until tomorrow: its figures are a day behind because of last week's All Saints' Day holiday.

The manufacturing PMIs on Thursday and Friday were almost uniformly disappointing. Only Spain was able to beat analysts' forecasts, and even that was with an uninspiring 51.8%. Britain's construction sector also came in higher than expected but it carries little weight.

Today's services PMI carries far more, since the services sector  accounts for more than three quarters of the UK economy. The consensus is for a figure of 53.3, more than half a point lower on the month. The equivalent US reading is pencilled in at 54.7, with America's ISM measure coming in higher than that at 59.5.

GBP among the leaders on hawkish BoE and positive Brexit story

GBP among the leaders on hawkish BoE and positive Brexit story

EUR and safe-havens out of the running as confidence persists

EUR and safe-havens out of the running as confidence persists

AUD and commodity currencies helped by continued upbeat mood

AUD and commodity currencies helped by continued upbeat mood

USD top of the shop after strong jobs and earnings data

USD top of the shop after strong jobs and earnings data

Weekly roundup

Weekly roundup

Go to Weekly round up
Personal payments

Personal payments

With a personal account you can enjoy competitive exchange rates and low fees on all your payments.

Find out more
Foreign exchange business solutions

FX business solutions

We provide tailored services to help companies make global payments and manage their foreign exchange risk

Find out more
Travel money

Travel money

Order your travel money for branch collection or secure it on our explorer multi-currency Mastercard®

Find out more