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Will the Last Chance Saloon be forced to close?


Brexit deadlines have come and gone for over four years. The latest – and probably not the last – is today, as prescribed by the Prime Minister a month ago. However, it seems nobody believes it anymore, and a story that “the UK won’t walk away from the table” sent sterling higher.

The pound walked all over the other major currencies yesterday, just as they had wiped the floor with it on Tuesday. Over the two-day period, it is on average unchanged, an outcome that looked highly unlikely 24 hours earlier. The sensation is that investors still refuse to believe that the government would deliberately precipitate a no-deal Brexit that would aggravate the economic damage already being done by anti-Covid measures. The lesson of the last four and a half years, and especially the last ten months, is that the fat lady has still not even been booked.

Andy Haldane, the Bank of England’s Chief Economist said he was “hopeful that Britain’s economic recovery from the initial impact of coronavirus would persist”. Whilst “there are risks on the horizon”, he said, the flexibility and resilience of businesses and households “gives me confidence for the future”.


Aussie down under

Following the Kiwi’s triumph on Tuesday, the Aussie went the other way yesterday, taking last place by a margin of 0.4% and losing an average of 0.5%. The AUD’s decline was precipitated by a speech from the Reserve Bank of Australia Governor, Philip Lowe.

The governor set out several possible measures to support the Australian economy, all of which involved some form of monetary easing. Analysts foresee a further cut to the RBA’s 0.25% Cash Rate. The employment data made little difference to the AUD, despite the loss of 30k jobs and an uptick in unemployment to 6.9%.

There was not much to be seen in the other economic data. Eurozone industrial production was in line with forecast, rising 0.7% in August. US producer prices rose 0.4% in September, twice as much as expected.


Bring me another deadline

The European Council meets today and tomorrow in Brussels. “EU-UK relations” does appear on the agenda but, with no agreement yet, they will not have much to talk about. Sterling should have nothing to fear from the UK ecostats either, for there are none of any consequence.

Arguably the most interesting statistic of the week came from Australia this morning. Residents expect inflation to rise to 3.4% in the next 12 months. That would be quite a jump: it was most recently measured at -0.3% in the second quarter. Chinese inflation slowed from 2.4% to 1.7% in September, its lowest level since February last year. US jobless claims this afternoon are expected to be roughly in line with last week’s numbers.

European data tomorrow cover inflation in Italy and the Eurozone. The United States reports on retail sales, industrial production and consumer sentiment. Canada reveals August’s manufacturing sales.

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