Daily Brief

Daily Brief

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I Give It a Year

What didn't happen

Excitement was in short supply on Tuesday. The retrospective evidence for that is to be found in the major-currency exchange rates, most of which are not materially different this morning from yesterday's opening levels. The yen is 0.3% higher, while the rest of them are practically unchanged against sterling.

Theresa May's grand day out in Europe appeared not to have achieved the hoped-for support for a 12-week postponement of Britain's departure from the EU. Parliament approved it yesterday afternoon, by a comfortable margin, but it would probably be safe to say that the house would have gone for a longer extension if one had been on offer. By the end of the day it became clear that the remaining 27 are likely to propose an extension either to the end of the year or for 12 months, as long as the prime minister can persuade them that she will make fruitful use of the time.

This afternoon the European Council will meet to discuss the matter. Investors will be surprised if it decides on anything other than a long delay. The EU will want to move the cliff-edge as far into the future as practicable, if only to avoid emergency extensions every few weeks.

Brexit is not the only gloom

The International Monetary Fund's latest World Economic Outlook refers to "a delicate moment". It observes that "A year ago, economic activity was accelerating in almost all regions of the world. One year later, much has changed." The IMF has downgraded its forecast for global growth in 2019 from 3.6% to 3.3% and the yen is a little firmer as a result.

The IMF blames the usual suspects: "The escalation of US–China trade tensions, needed credit tightening in China, macroeconomic stress in Argentina and Turkey, disruptions to the auto sector in Germany, and financial tightening alongside the normalization of monetary policy in the larger advanced economies have all contributed to a significantly weakened global expansion, especially in the second half of 2018."

There was no contradictory evidence from yesterday's economic data. Italian retail sales increased by 0.9% in the year to February. America's NFIB optimism index was just about unchanged at 101.8. The US Bureau of Labor statistics reported 7% fewer job vacancies. America's IBD/TIPP Economic Optimism Index dipped 1.5 points to 54.2.

ECB, FOMC, EC

Today's agenda is considerably more action-packed. The European Central Bank president will update markets on the likely course of monetary policy and the Federal Open Market Committee minutes will reveal the thinking at last month's meeting. There are plenty of ecostats on the list too.

Norway has already reported that inflation was almost unchanged at 2.9% in March. Britain and Italy report this morning on industrial production. There are also UK figures for manufacturing output, the balance of trade and GDP growth in February. The US inflation data come after lunch.

There are no overtly Brexit-related debates scheduled for the House of Commons. Investors will have to wait until the end of the day for confirmation of a lengthy delay to Brexit.

GBP steady against most other major currencies

GBP steady against most other major currencies

USD steady against most other major currencies

USD steady against most other major currencies

JPY a touch higher on global growth concerns

JPY a touch higher on global growth concerns

EUR steady against most other major currencies

EUR steady against most other major currencies

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