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Daily Brief

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A deal is possible

Four on the trot

For a fourth successive day sterling was the top-performing major currency. It was not such a crushing victory as the previous two; an average of 0.3% and gains of a quarter of a cent each from the euro and US dollar - but a win is a win.

There is some confusion about the deadline for the submission of Britain's new withdrawal proposal to the EU. It was supposed to be today, in order to give the EU27 a couple of days to digest it ahead of Thursday's summit meeting. The Irish government and other unnamed sources speculate that a further European Council meeting will be needed to get the latest plan - whatever it is - across the line. A deal with the EU27 this week looks unlikely.

Yet, despite the doubts, the pound banked another win on Monday. Investors were clearly not buying it on the assumption that an agreement is in the bag: Even assuming support from Brussels there is still the small matter of parliamentary approval to achieve. It looks very much as though investors have been pricing in a delay beyond All Hallows' Eve and pricing out a no-deal Brexit on the date endorsed yesterday by the Queen.

Central banks at large

The Bank of England, the Bank of Japan and the Reserve Bank of Australia all had something to say. BoJ governor Kuroda had little impact on the yen with his speech this morning but sterling moved higher after the BoE's Jon Cunliffe spoke and the Aussie received momentary help from the RBA minutes.

Kuroda San made the entirely unremarkable point that the BoJ would ease policy further if economic risks were to grow. In a Q&A session following his speech the BoE deputy governor said investors should not rule out the possibility of rates moving higher after a no-deal Brexit. The RBA minutes revealed that last month's rate cut was by no means a no-brainer, and that arguments were made on both sides.

Monday's economic statistics were few. Euroland industrial production increased 0.4% in August. The New York Fed's manufacturing index doubled to 4 in October. 

UK jobs, EU confidence

China was first up this morning with a pickup in inflation from 2.8% to 3.0%, a little more than expected. Japanese industrial production fell 1.2% in August and was 4.7% lower on the year. There are data this morning for UK employment and German investor confidence.

Analysts predict that the rate of unemployment in Britain will be unchanged at 3.8%.They also see a slowdown in annual basic wage growth, from 3.8% to 3.7%. ZEW's surveys of economic sentiment in Germany and Euroland are expected to show greater pessimism in October. New Zealand prints its quarterly inflation data tonight; the headline rate is projected to have slowed from 1.7% to 1.4%.

Bank of England governor Mark Carney will give evidence to Parliament's Treasury Committee this morning on the bank's Financial Stability Report. Separately, MPC member Gertjan Vlieghe will address a conference in London.  

GBP: Another win

GBP: Another win

USD: USD Pickup in NY manufacturing

USD: USD Pickup in NY manufacturing

AUD: Further cuts not a done deal

AUD: Further cuts not a done deal

JPY: More stimulus if necessary

JPY: More stimulus if necessary

EUR: Shares second place

EUR: Shares second place

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