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Ex cathedra

Another injection of uncertainty

Sterling came close to extending its six-day vacillation between first and last place among the major currencies. When Commons speaker John Bercow made his statement ruling out a third vote on "substantially the same" bill it looked as though the pound had it in the bag. But then investors had a rethink.

Investors' first reaction to Speaker Bercow's statement was one of surprise. They are not, typically, students of Thomas Erskine May's guide to parliamentary procedure. Their second reaction was to mark down sterling: the fresh injection of uncertainty made it unlikely that the government will win approval for a deal this week. Then, after a little sober reflection, they softened their attitude. The assumption is (for the moment at least) is that no vote this week means that on Thursday Theresa May will ask the EU for a postponement of Article 50 , as mandated by parliament.

A majority of EU leaders will probably agree, albeit reluctantly. But the decision must be unanimous, and there are 27 potential vetoes out there.  Absent an extension to Article 50 the onus would be back on parliament, with eight days to go before 29 March. The obvious options would be a new and different proposal from the government, the no-deal Brexit that parliament has already rejected or the revocation of Article 50, which would cause widespread offence.

Not much else

It would have required something compelling to wrest investors' interest away from the Brexit spectacle on Monday and the economic data failed to provide it. The statistics were few and they were not very interesting.

The euro zone's contribution came closest. In January the balance of trade widened to a seasonally-adjusted €17 billion. Of itself that was not remarkable but the zone's surplus with the United States and its deficit with China grew bigger, potentially increasing tension in both directions: Europe has already announced its wish to balance trade with China and the US president is well-known to be on Europe's case, especially with regard to German cars.

In the States the NAHB housing market index was steady at 62, roughly in line with forecast. Overnight data from Australia showed slightly less confidence among consumers (Westpac's Q1 survey) and further falls for house prices, which are 5.1% lower on the year.  

UK jobs

The employment data at half past nine are forecast to show basic wages continuing to outpace inflation and unemployment unchanged at 4.0%. At those levels the numbers should do sterling no harm, though investors will be more interested in what new wheeze Downing Street can come up with.

Also out today are ZEW's surveys of economic sentiment in Germany and Euroland and US factory orders. Tonight New Zealand reports on the fourth quarter current account.

As for the pound, it came out of yesterday's excitement unchanged on average, flat against the US, Canadian, NZ and Australian dollars and with quarter-cent losses to the euro and the franc.

GBP On average unchanged, confused by speaker's statement

GBP On average unchanged, confused by speaker's statement

USD Flat against Loonie and antipodeans

USD Flat against Loonie and antipodeans

EUR Steady against the Swiss franc after trade data

EUR Steady against the Swiss franc after trade data

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