Don't stop the party
"Leaving the EU without a deal is the default scenario and there appears to be a majority in the House of Commons to oppose a no-deal. But opposing no-deal will not stop no-deal from happening at the end of March." Those were the words of Michel Barnier yesterday in Brussels.
He was adamant that Britain has two choices: "Number one, an orderly withdrawal based on the agreement that we have built step-by-step with the UK. Number two, a disorderly withdrawal." These observations from the EU's chief negotiator might have been expected to worry investors and hurt the pound. But no. Sterling is on a roll and nobody wants to break up the party.
The ability of investors to conjure up unicorns - cancelling Article 50, staying in the single market - is at least on a par with those who voted down the prime minister's withdrawal bill in the belief that something better was available. So sterling had another cracking day on Wednesday, strengthening by an average of 0.9%. Compared with a week ago the pound is up by 1.8% with its closest competitor, the NZ dollar, 1.1% behind.
The rest of the field
As sterling pressed ahead the other major currencies were left to fight it out among themselves for the runner-up positions. There was a close contest for second place between the euro and the Swiss franc. The US, Canadian and NZ dollars together with the yen and the Swedish krona were not far behind.
The euro and the franc did nothing to earn their shared silver. Euro zone consumer confidence improved only slightly in January and there were no economic data from Switzerland. Incredible as it might sound, it looked very much as though the two were pulled higher by the rising pound.
In North America the only ripples came from Canadian retail sales, which fell 0.9% in November to leave them 0.6% lower on the year. The figures were worse than investors had expected and cost the Loonie a swift half cent against the US dollar. It is down by two cents against sterling.
Jobs and rates
This morning's Australian employment data contained fewer surprises than usual and were really quite good, with the unemployment rate ticking down to 5.0%. Any benefit to the Aussie from the numbers was wiped out an hour or so later when NAB, a bank, increased its variable mortgage rates.
NAB was behind the curve with its mortgage rates: Australia's other three big banks had applied increases last year. "Elevated funding costs" were behind the decision, and investors wondered if the Reserve Bank of Australia might have to help out with a rate cut later this year. The Aussie is down by two and a half cents on the day - 1.4% - and is the weakest among the majors.
The other rates up for grabs today are the European Central Bank's benchmarks. Analysts do not foresee any changes to monetary policy but they will listen carefully to what president Mario Draghi has to say about the economic outlook. Today brings the provisional purchasing managers' indices from Europe and the States and tomorrow the CBI reports on UK retail sales.