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For this relief much thanks

Sterling bears take a nap

Ahead of London's opening yesterday, it looked as though the pound was in for another kicking as it spiked a third of a cent lower. And then, nothing. Sterling was eventually unchanged - or almost so - against the US dollar, euro and Swiss franc.

It is always more difficult to explain why something did not happen than why it did. With that caveat, the best guess is that any new selling was matched by investors happy to take profits on what they had sold previously. There was nothing among the consumer price index data to energise the pound in either direction. Headline UK inflation was unchanged and on target at 2.0% and the core reading was steady at 1.8%. The government's house price index portrayed a 4.4% annual decline in London against the background of a 1.2% rise nationally.

On the Brexit front, the House of Lords erected another obstacle to any attempt to prorogue Parliament. It gave its backing to a bill already approved by the House of Commons, which obliges the government to make a series of statements about the Northern Ireland Assembly.

Lack of movement

It was not only sterling that enjoyed a steady day. Potentially market-moving data from Euroland, Canada and Australia did not provide enough surprises to get those currencies going.  

Inflation in the euro zone was a tad higher than forecast at 1.3% but not sufficiently different to make any difference to expectations that the European Central Bank is girding its loins for another round of monetary stimulus. The headline rate of Canadian inflation slowed from 2.4% to 2.0% as predicted. Australian unemployment was steady at 5.2% and the number of people in work was almost unchanged, though there was a 21k swing from part-time to full-time employment.

The Federal Reserve's Beige Book reported continued "modest" expansion in economic activity and "modest" growth in employment. In the Boston district, "tariffs and trade policy uncertainty were major issues for manufacturers and in Philadelphia "trade uncertainty further delayed business investment". 

UK retail sales

Sterling's highlight - if that is what turns out to be - today is retail sales and tomorrow's is public sector net borrowing. It is possible that the South African Reserve Bank will take its benchmark interest rate back down to 6.5% this afternoon after eight months at 6.75%.

UK retail sales fell in May and it is expected that they will have gone down again in June, this time by 0.3%. This morning Switzerland issued its usual monthly reminder that a weak currency is not essential to a trade surplus. US weekly jobless claims come out after lunch, as does ADP's Employment Change figure for Canada.

Friday begins with Japanese inflation, expected to be steady at 0.7%. Canada reports on retail sales and the University of Michigan publishes its provisional consumer sentiment index. At some point in the near future, the US Congress will have to raise the debt ceiling or risk precipitating a government shutdown.

GBP: Steady, for a change

GBP: Steady, for a change

EUR: Inflation ticks up to 1.3%

EUR: Inflation ticks up to 1.3%

CAD: Inflation slows to 2.0%

CAD: Inflation slows to 2.0%

AUD: Fewer part-time, more full-time workers

AUD: Fewer part-time, more full-time workers

USD: Beige Book notes trade uncertainty

USD: Beige Book notes trade uncertainty

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