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Prorogation never happened

Government loses 11-0

In its highest-profile judgment to date, Britain's Supreme Court voted 11-0 to rule that the prime minister's suspension of Parliament was "unlawful", and that it therefore never happened. Both houses will be back at work today. Despite the political enormity of the verdict, and the surprise it generated, the pound is mostly unchanged on the day.

As the verdict was handed down, sterling did pop higher, the assumption being that it strengthened the hand of those seeking to prevent a no-deal Brexit. In most cases, though, all or part of the advances were given back overnight. The pound's only real net gains are against the US and Canadian dollars and the euro. In each case it is 0.3%, a third of a US cent, higher on the day.

Not surprisingly, the UK economic data paled into insignificance at the side of the Supreme Court ruling. Public sector borrowing was less than forecast in August while the CBI's Industrial Trends Survey found that manufacturing output was flat in the three months to September.

Antipodean divergence

Commentary from the Reserve Bank of Australia and the Reserve Bank of New Zealand was initially positive for both the Aussie and Kiwi dollars. In both cases, the gains were transitory but the Kiwi managed to hold onto a little more than the Aussie, leaving it with a 0.3% advantage on the day.

The Aussie's urge came from an "economic update" by RBA governor Philip Lowe. Although he saw positive signs from the domestic economy - "a gentle turning point" - he noted that "we cannot completely insulate ourselves from long-lasting shifts in global interest rates". The governor appeared to be signalling the rate cut next week which investors had already been expecting.

With the NZ dollar, it was the wholly-expected decision of the RBNZ to keep its official cash rate at 1% after slashing it from 1.5% two months ago. Whilst the statement did mention "scope for more fiscal and monetary stimulus, if necessary" there was no sense of urgency. The Kiwi shared first place with the Swiss franc, a millimetre ahead of the pound.

Impeachment threat

After the Supreme Court ruling, the biggest political story on Tuesday was the launch of a formal inquiry into the possible impeachment of the president. As for the economic data, the only real surprise was the resilience of German business confidence.

Monday's weak provisional purchasing managers' index readings had led investors to set the expectation bar low for yesterday's IFO German sentiment measures. In the end, they showed a slight improvement overall, though "in manufacturing the business climate has only one direction: downward". The same could be said of US consumer confidence: the Conference Board's index declined nine point in September to 125.1.

Today's ecostat agenda is short. New Zealand has already reported a slight widening of the trade deficit in August as imports stalled and exports fell. Swiss business confidence, the CBI's Distributive Trades Survey (UK retail sales) and US new home sales are yet to come.

GBP: Supreme Court ruling has limited impact

GBP: Supreme Court ruling has limited impact

USD: Largely unaffected by impeachment prospect

USD: Largely unaffected by impeachment prospect

EUR: Unmoved by German business confidence

EUR: Unmoved by German business confidence

NZD: Unhurt by RBNZ statement

NZD: Unhurt by RBNZ statement

AUD: Helped only briefly by Lowe speech

AUD: Helped only briefly by Lowe speech

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