Daily Brief

Daily Brief

See recent articles

Plenty of heat; not much light

No surprises

Since Thursday morning there has been a ministerial resignation, a prime ministerial resignation, a slew of calls for a no-deal Brexit by wannabe Tory leaders and an upheaval of Britain's political status quo. Yet over those five days the pound has lost an average of just 0.2% - a fifth of a Swiss cent.  What went right?

Nothing on that list came as a complete surprise. The resignation of House of Commons leader Andrea Leadsom was simply a precursor to her candidacy to replace Theresa May, whose "resignation" had looked increasingly  inevitable. The list of hard-guy Brexiteers eager to succeed her was uncertain only with regard to its length. The migration of true leavers from Nigel Farage's Ukip to Nigel Farage's Brexit party was always going to happen, as was the exodus of remainers from Conservative and Labour to Liberal Democrat and Green.

If there is any surprise at all it is that sterling moved higher on Friday and over the weekend following Mrs May's resignation speech: Whilst an extended period of uncertainty might already have been built into sterling's price, confirmation of it was hardly a cause for celebration. Even so, from Thursday's opening the pound has added a quarter of a US cent, lost a fifth of a Swiss cent and held steady against the euro.

Meanwhile, in the economy

The economic statistics from Europe and the United States tended to be more or less disappointing. Purchasing managers' index readings from both continents mostly fell short of forecast. German business confidence softened. US new home sales and durable goods orders fell. UK retail sales were mixed.

The "official" UK retail sales data on Friday were better than expected in April, flat on the month rather than falling as predicted. The CBI's Distributive Trades Survey for May was significantly below forecast at -27%. US new home sales fell 6.9%, three times as much as expected. Durable goods orders were close to forecast, falling 2.1% in April.

Provisional PMIs from the States and pan-Euroland all missed the mark. Euro zone manufacturing was particularly weak at 47.7 but the 51.6 composite Euroland figure looked better than America's 50.9.

Horse trading

The EU elections have altered the political balance not only in Britain but in Europe as a whole. No longer is the centre-right/centre-left coalition in charge of affairs: the small parties have grown and the big parties have become smaller. This will complicate at least two appointments that are key to the EU economy.

Jean-Claude Juncker's position as president of the European Commission and Mario Draghi's as the head of the European Central Bank must both be filled. The ECB job is not so urgent as, but arguably more economically important than, the EC position. Whoever heads up the Commission will find themself involved in disciplinary action against Italy.

The key appointment in Westminster will be at least as important and difficult to fill. Nine candidates have already joined the list, which is likely to grow longer this week. A new complication there is that Labour leader Jeremy Corbyn is said to be ready at last to oppose the government, calling for a people's vote on Brexit options.

GBP: Only slightly ruffled by political shakeup

GBP: Only slightly ruffled by political shakeup

USD: Ruffled by less buoyant data

USD: Ruffled by less buoyant data

EUR: Unchanged over the long weekend

EUR: Unchanged over the long weekend

Weekly roundup

Weekly roundup

Go to Weekly round up
Personal payments

Personal payments

With a personal account you can enjoy competitive exchange rates and low fees on all your payments.

Find out more
Foreign exchange business solutions

FX business solutions

We provide tailored services to help companies make global payments and manage their foreign exchange risk.

Find out more
Travel money

Travel money

Order your travel money for branch collection or secure it on our explorer multi-currency Mastercard®.

Find out more