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More volatility for sterling

Nobody knows

Tuesday's Supreme Court gloss was quickly stripped away from the pound yesterday as the prime minister made clear that he remains determined to push ahead with a no-deal Brexit on 31 October. Sterling was weakest among the major currencies, losing an average of 0.5%: Its losses were spread fairly evenly.

It has been said before, but bears repetition, that the pound nowadays more resembles an emerging market currency than a bastion of strength and stability. In the last nine working days it has led the field three times and come last twice. With 23 days to go nobody - least of all the government - can be sure whether the Benn Act will be sufficient to prevent a no-deal departure at the end of next month or if the prime minister will find a way to circumvent it.

As a consequence, investors are inclined to react to every rumoured or imagined development in the Brexit process, fearing that if they fail to do so they will miss the boat. Beneath it all, they apparently have a positive view of the outcome: sterling is the top performer over the last month with an average gain of 1.7%. But everyone is acutely aware that another booby trap could be waiting around the corner.

Not many numbers

In a day of thin pickings for economic data central bankers had to fill whatever silences they could. Possibly the most noticeable was the resignation of Sabine Lautenschläger from the board of the European Central Bank. The two UK ecostats showed a modest fall in mortgage approvals and a slower pace of decline in retail sales.

The departure of Ms Lautenschläger came out of the blue, and is thought to be in protest against the stimulus measures announced by the bank earlier this month. In the States Charles Evans, the president of the Chicago Fed, said that he sees no need for further rate cuts this year. His opposite number in St Louis, James Bullard, would like to see another quarter-percentage-point reduction despite voting against last week's cut.

Retail sales in the year to September fell for the fifth consecutive month according to the CBI. The organisation's chief economist cited the usual suspects; a possible no-deal Brexit and sterling weakness. US new home sales went up 7.1% in August after falling 8.6% in July. The dollar strengthened following, though not necessarily because of, the news.

Not many more important numbers

The only really major data releases in the next couple of days will be from the United States; second quarter gross domestic product today and durable goods orders tomorrow. ECB president Mario Draghi will be speaking at the annual conference of the European Systemic Risk Board.

Euro zone data cover money supply and consumer and business confidence as well as French inflation and consumer spending. The US figures relate to the trade deficit, personal incomes and spending, and the finalised Michigan consumer sentiment index.

The sole UK statistic is Gfk's measure of consumer confidence, which comes out tonight. There could also be fresh developments in the Brexit saga. 

GBP: Brexit row heats up again

GBP: Brexit row heats up again

EUR: ECB board member resigns unexpectedly

EUR: ECB board member resigns unexpectedly

USD: Differing Fed views on rate outlook

USD: Differing Fed views on rate outlook

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