Daily Brief

Daily Brief

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Can, street; street, can

Good news

Sterling is higher on the day against both the South African rand and the Indian rupee. The rand fell because of concerns about the country's fiscal and trade deficits, the rupee as a result of the Reserve Bank governor's resignation. Here endeth the good news.

It cannot have escaped readers' attention that the prime minister told the Commons yesterday afternoon that she had postponed the Brexit vote previously scheduled for today.  Investors had seen it coming, and had spent most of the day marking down the pound.  That did not prevent them from giving sterling another kick when Theresa May confirmed that she would be heading to Europe today in the hope of renegotiating the supposedly unrenegotiable deal. 

Sterling is an average of 0.8% lower against the other ten most actively-traded currencies. It gave up a cent and three quarters to the US dollar and Swiss franc and lost almost one euro cent. The concern of investors now is that the Brexit process has descended to the level of a crap-shoot with a wholly unknowable outcome that could be anything from awesome to awful.  Nobody is eager to be long of sterling when the next balloon goes up.

Feeble figures

The postponement of the Brexit vote was not the pound's only handicap on Monday. Of nearly a dozen UK economic indicators only a couple were not weaker than expected. The data doubtless contributed to sterling's early decline but their influence was overtaken by rumours of the postponed vote.

Gross domestic product expanded by 0.1% in October and by 0.4% in the three months to October. Those were the numbers that did not disappoint.  As for the others, manufacturing and industrial production were down by 0.9% and 0.6% respectively and the trade deficit in goods widened to £11.9bn. Later in the day the NIESR estimated growth in the three months to November at 0.3%.

Data from Europe showed Italian industrial production increasing by a monthly 0.1% and the Sentix survey put Euroland investor confidence nine points lower at -0.3. Canadian housing starts were up by 4.3% while building permits fell 0.2%.

Jobs and speculation

Another set of heavyweight UK data arrives this morning with the figures for employment and earnings. They will have to be very exciting indeed to deflect investors' imagination from the postponed Brexit vote and what it might mean.

Unemployment is forecast to remain unchanged at 4.1% for October.  Basic earnings are expected to be 3.2% higher on the year while earnings plus bonuses are pencilled in for a 3.0% rise. With CPI inflation last seen at 2.4%, increases of that order would be at least theoretically positive for sterling.

The main European ecostats are the ZEW investor sentiment readings for Germany and the euro zone. South Africa reports on manufacturing production and the United States on producer prices. Not much there, then, to draw the investor's eye away from that long-running favourite - Brexit Deal or No Deal.

GBP thumped when Brexit vote postponed

GBP thumped when Brexit vote postponed

ZAR lower on twin deficit concern

ZAR lower on twin deficit concern

USD leads the majors

USD leads the majors

INR falls after Reserve Bank governor resigns

INR falls after Reserve Bank governor resigns

CHF leads the majors

CHF leads the majors

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