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Sterling surprisingly steady

Something will turn up

Arguments for and against sterling are, for the moment, cancelling out one another. The bad news is that Theresa May might lose the vote on the 11th of  December. The good news is that such a loss would not lead inevitably to a no-deal Brexit.  As for what it would lead to, there are many, many opinions.

When it comes to sterling, just about the only thing investors can agree upon is that the prime minister will not get her Brexit bill through Parliament in two weeks' time. On the face of it that is bad for sterling. The prime minister insists that the only alternative to her deal is no deal, an outcome which, almost everyone accepts, would have severe negative implications for the economy. Yet sterling was steady on Monday, losing out only to the Northern Scandinavian crowns - and even those losses were tiny.

Investors are convinced, Micawber-like, that something will turn up. They are not sure what form that something will take; a second vote on the bill, an extension to the Article 50 deadline, another referendum or whatever.  But for now they reckon that just about all the bad news has been priced into sterling, with the glaring exception of the no-deal Brexit which they see as highly unlikely.

Steady state

The pound's stability on Monday was symptomatic of the FX market as a whole. Between the Northern Scandinavian crowns in the lead and the South African rand at the rear the gap was just 0.5%. Sterling, the euro, the US dollar and the Swiss franc were unchanged against one another.

If higher oil and equity prices pointed to an increased appetite for risk among investors the sentiment did not extend to the traditionally "risky" currencies. The Australian dollar was flat against the safe-haven Japanese yen. The Canadian dollar was down by half a cent despite a modest rebound in oil prices.

The only serious ecostats during the London session were the IFO measures of German business sentiment. All three - for expectations, current assessment and business climate - were lower on the month. Data released overnight showed New Zealand's trade deficit narrowing in October as exports increased by more than imports.

Trump's spanner

The ever-helpful US president lobbed a spanner into the Brexit debate last night with his observation that the government's bill would be an obstacle to UK-US trade. His intervention may turn out to have been the highlight of the day.

France opened the batting for Europe with a three-point fall in consumer confidence, from 95 to 92. Italian consumer and business confidence are next up, followed by the CBI's Distributive Trades Survey of UK retail sales. There are two US house price measures after lunch; Case-Shiller's index of house prices and the Federal Housing Finance Agency's housing price index.  Richard Clarida, the vice president of the US Federal Reserve, will be speaking in the early afternoon.

GBP steady as Brexit bill arguments balance

GBP steady as Brexit bill arguments balance

ZAR gives some back

ZAR gives some back

CAD sees no benefit from risk-on attitude and higher oil

CAD sees no benefit from risk-on attitude and higher oil

NZD unaffected by narrower trade deficit

NZD unaffected by narrower trade deficit

NOK leads, helped by oil price ralyette

NOK leads, helped by oil price ralyette

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