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Vigorous pound

Having been comprehensively trashed on Friday the plucky pound got back up onto its feet, dusted itself down and fought its way back to become the leader among the major currencies yesterday. Sterling strengthened by an average of 0.4% on the day. 

Of course, that still left the pound an average of 0.9% below Friday's opening levels but it was heartening to its supporters that sterling had not thrown in the towel. Several factors contributed to its recovery.  First, after a weekend of quiet reflection investors concluded that they may have overdone the selling on Friday. Second, Britain's opposition Labour party was preparing to give its support to a referendum on whatever deal the government eventually cobbles together. Third, commonsense still militates against a no-deal Brexit: on Monday the government published another of its occasional papers about the perils of the cliff edge.

The CBI's Industrial Trends Survey, released on Monday morning, was not especially helpful to sterling. The pound dipped after it came out, though the damage was not long-lasting. Sterling's gains on Monday included one Swiss cent and a quarter of a cent each from the US dollar and euro.

Slightly less vigorous euro

The euro shared third place with the US dollar behind the Norwegian krone, which received some help from a further slight firming of oil prices. It got an early-afternoon boost from European Central Bank president Mario Draghi, who was uncharacteristically bullish about the Euroland economy.

Addressing the European Parliament Sig. Draghi spoke of "a relatively vigorous" acceleration of inflation in the euro zone. Given the percentage-point gap between headline inflation at 2.1% and core inflation at 1.1%, it is unlikely that he was hinting at any early increase in euro interest rates.  However, he was undoubtedly taking a further step towards managing expectations of eventual tightening, probably next year.

There was nothing else of any consequence to exchange rates on Monday's agenda.

More of the same

Today's schedule is no more captivating than Monday's. Central banker speeches, US house prices and not much else. The most important numbers are arguably the balance of trade figures from New Zealand tonight.

The Bank of Japan's governor Kuroda has already said his piece and the gist of it was that the BoJ remains keen to avoid interest rates rising by accident.Yet to come are the ECB's Peter Praet and Benoît Cœuré and the Bank of England's Gertjan Vlieghe.

All of the day's European data are already done and dusted: German wholesale prices went up by 0.3% in August and the French business climate was a little softer, down three points to 107. US house prices and the Richmond Fed's manufacturing index come after lunch. New Zealand's trade deficit is forecast to have widened considerably in August but for the year as a whole the change should be minimal. Also tonight, ANZ releases its measures of NZ business confidence.

GBP hits back on talk of Labour referendum support

GBP hits back on talk of Labour referendum support

CHF brings up the rear

CHF brings up the rear

USD unchanged against the euro

USD unchanged against the euro

EUR enjoys brief spurt after upbeat assessment by ECB boss

EUR enjoys brief spurt after upbeat assessment by ECB boss

JPY held back by central bank caution

JPY held back by central bank caution

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