Two and a half weeks ago sterling was enjoying a "Brexit bounce", on the back of a possible compromise between the Conservative government and the Labour opposition.The cracks quickly reappeared and since then the pound has fallen an average of 3.1%. Yesterday alone it lost 0.5%.
Not only has there been no compromise between Theresa May and Jeremy Corbyn, the prime minister has lost whatever tenuous grip she had on her own team. The leader of the House of Commons resigned yesterday and the baying from the back benches make it obvious that Conservative MPs want Ms May to do likewise, immediately if not sooner. Although some might consider it undemocratic, they are gearing up to hold a second referendum on her leadership five months after they held the first one.
Politics of this sort is not calculated to endear investors to Britain or the pound. Whoever replaces Ms May will be in exactly the same predicament that she has faced for the last two years: there is no withdrawal mechanism that can win the support of a majority of the House and, at the same time, satisfy the EU. Until parliament can come up with a new wheeze sterling is likely to remain under pressure.
Patience in places
As Westminster MPs look intemperate the Federal Reserve is anything but. The minutes of the Federal Open Market Committee reiterated that it "will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate". Importantly, there was no hint of a rate cut.
That puts investors at odds with the Fed. Futures prices imply one rate cut before the end of the year, despite the FOMC's protestations of patience. Nevertheless, the US dollar did strengthen after the minutes came out. It is on average unchanged on the day and two thirds of a cent higher against sterling.
The Canadian dollar had an uncomfortably interesting day. It perked up nicely on the back of stronger-than-expected retail sales only to crash into reverse when oil prices took a tumble. The Loonie took the penultimate slot, ahead of sterling by two fifths of a cent.
Votes and PMIs
Voting in the European elections begins today in Britain and the Netherlands. The usual element of election-night tension will be absent because there are no exit polls and the result will be held back until Sunday evening. Today's main topic is the provisional purchasing managers' index readings.
Yesterday's UK consumer price index data were overshadowed by the kerfuffle in Westminster and, anyway, were not contentious. Headline inflation rose from 1.9% to 2.1% in April, just missing the 2.2% forecast. Public sector borrowing was less than expected. The UK retail sales figures come out tomorrow.
Japan opened the PMI batting this morning with a 49.6. The commentary from Markit looked even more pessimistic than the number. Other than the manufacturing readings from Germany and pan-Euroland the other provisional PMIs are expected to be in positive territory above 50. Watch out for tomorrow's US durable goods orders, which are notoriously difficult to predict