Daily Brief

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Still giving

Not getting it done yet

There was a moment of hope for the prime minister and sterling yesterday evening when the Commons voted to approve the government's Withdrawal Agreement Bill. Less than half an hour later there was wailing and gnashing of teeth when the same MPs voted down the programme motion to accelerate passage of the bill.

It was a classic case of good-news-bad-news. On balance it was a tactical defeat for the government, in that it probably makes the 31 October target unachievable. However, the vote did show a serious degree of support for the WAB, so it could just mean leaving the EU at a later date. It is uncertain what will happen next. The EU is likely to agree to a postponement, perhaps to 31 January. The prime minister might restart debate on the WAB, which is currently in limbo, or he could ask the opposition for a general election. Clearly this adds up to renewed uncertainty.

Investors had welcomed the progress towards a deal, rewarding sterling with unaccustomed riches; it strengthened by 5% in the two weeks to Tuesday. They did not welcome that progress being cut short and the pound is 0.7% lower on the day, in last place, with losses of one and a quarter US cents and three quarters of a euro cent.

On the inside pages

The safe-haven Japanese yen was the top performer, strengthening by an average of 0.8% against the other majors, while the antipodean dollars shared the penultimate slot seven eighths of a cent ahead of the pound. No inspiration was to be found among the ecostats.

UK public sector borrowing was less than expected in September but £600 million more than the same month last year.  It was "the first September year-on-year borrowing increase for five years". The CBI's Industrial Trends Survey was nine points lower at -37 "amid [a] gloomy outlook" with "downbeat" prospects. Canadian retail sales unexpectedly fell 0.1% in August. There was no reaction from the Loonie, which is just about unchanged against the US dollar.

The divergence of the yen from the commodity dollars did not coincide with the Brexit news. However it did follow that news and, logically, was at least to some extent a result of it.

What now?

With the Brexit bill in limbo, investors will be kicking their heels today until some new development emerges, either from London or Brussels. The ecostat agenda is once again short and unpromising. 

New Zealand's trade deficit for September narrowed by less than forecast as imports stalled and exports increased. South African inflation this morning is predicted to be roughly steady at 4.2%. After lunch Eurostat reports on consumer confidence. Tonight brings the opening shots in the monthly round of provisional purchasing managers' indices.

As for Brexit, and what happens next, the commentators are once again reduced to confessing "We Don't Know". Watch out for developments.

GBP: Brexit bill and sterling on pause

GBP: Brexit bill and sterling on pause

JPY: Safe haven demand in times of doubt

JPY: Safe haven demand in times of doubt

NZD: Trade deficit narrows

NZD: Trade deficit narrows

CAD: Loonie unaffected by retail sales fall

CAD: Loonie unaffected by retail sales fall

ZAR: Inflation data today

ZAR: Inflation data today

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