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The only game in (this) town

If you don't vote you can't complain

Investors are expecting the Prime Minister's Conservative Party to secure a working parliamentary majority today and that he will use it to pass his EU withdrawal bill, completing the first stage of Brexit on 31 January.

Sterling was not the winner on Wednesday. On average, it was unchanged against the other major currencies. However, it did cement the gains it has made since the election was called at the end of October, including three and a half US cents, two and three quarter euro cents and nearly two Swiss cents. The assumption is that the government will secure a trade deal with the EU within a year, restoring the confidence of consumers and businesses and allowing the pound to push ahead.

That is quite an assumption, but it has been sufficient to put the pound close to a two-and-a-half-year high against the euro and a three-and-a-half-year high against the Aussie as it enters election day. There are two obvious risks. A win for Johnson could lead to a "buy the mystery, sell the history" correction, while another hung Parliament could spark a straightforward sell-off. Alternatively, of course, sterling could simply carry on upwards.

Fed sticks

One vote that did go exactly according to plan was the Federal Open Market Committee's unanimous decision yesterday to leave the Funds Rate target range unchanged at 1.5%-1.75%. It was not good news for the currency though: the dollar was Wednesday's biggest loser, giving up three quarters of a cent to sterling.

It was not the decision itself that did the damage. Nor was it the FOMC's statement or the chairman's press conference where he said "our economic model remains a favourable one". Rather, it was the expectation of most participants that rates will not be rising next year. "The FOMC's monetary policy message is that… it would take some significant change in the outlook to induce the Fed to move".

Most of Wednesday's economic data made little difference. US inflation at 2.1% was irrelevant alongside the FOMC decision. Swedish inflation did count though: at 1.8% it was above forecast and enough to put the krona in the lead with a 0.7% gain.

Jordan, Lagarde and Poloz

The Swiss National Bank's Thomas Jordan, the European Central Bank's Christine Lagarde and the Bank of Canada's Stephen Poloz will all make an appearance today. No changes to monetary policy are likely but investors will be keen to hear - especially from Ms Lagarde - where they see it heading.

There are no big-ticket ecostats on today's list. The RICS housing price balance came out overnight, showing a faster rate of decline. German inflation (unchanged at 1.2%), Euroland industrial production and US producer prices are only vaguely interesting. Friday is equally unpromising, with little more than German wholesale prices, US import and export prices and US retail sales.

Inevitably, the focus on Friday will be the outcome of the UK general election. Perhaps the safest guess is that sterling will not open tomorrow where it started today.

GBP: Binary risk of UK election

GBP: Binary risk of UK election

USD: No change expected from Fed tonight

USD: No change expected from Fed tonight

SEK: Leads as inflation ticks up

SEK: Leads as inflation ticks up

EUR: Lagarde's first ECB press conference

EUR: Lagarde's first ECB press conference

CHF: No change expected from SNB

CHF: No change expected from SNB

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