Despite warnings that the exit poll might not accurately describe the result of the general election, investors seized upon the prospect of a big majority for the Conservative Party. Sterling leapt higher, adding more than two euro cents. As the individual constituency results came in, they confirmed that the government had secured a comprehensive mandate. The majority is amply wide enough to give the government a free rein on policy and five more years in power.
The mood among investors ahead of the vote had been that an orderly Brexit in a knowable time-frame would be preferable to the uncertainty of another hung Parliament. Even the prospect of another referendum and, with it, the possibility that Britain might remain in the EU, was a less attractive option.
Sterling hit a three-year high against the euro and almost a two-year high against the US dollar. They can be fairly sure that Parliament will vote for Britain to leave the EU at the end of January, completing phase one of the Brexit process and ending that round of uncertainty. They cannot, however, be sure about what will come next.
There are a myriad of possibilities more or less damaging in the long run to the UK economy and the pound. For now, investors are satisfied that the die has at last been cast and that Britain has the nearest thing to a stable government that it has seen in a decade. In the near term that should be supportive of the pound.
In the longer term, doubts are almost certain to emerge about the eventual destination of the Brexit juggernaut and Britain's future relationship with what until now has been its biggest trading partner by far. As they do, a new uncertainty will replace the confusion that attended the last three years of deal-or-no-deal. A no-deal Brexit on 31 December 2020 is, after all, still one of the possibilities if a trade deal isn’t reached in time
As for the impact of all this on the pound, it is probably fair to assume that the floor for sterling today is higher than the one that existed a couple of months ago. That is not to say it must inevitably make upward progress from here. A Conservative victory was, after all, priced into the pound over the last six weeks. It would not be unreasonable for buyers of foreign currencies to take advantage of current levels to cover at least a proportion of their needs. Bear in mind that the last time GBP/EUR was at this level was in April 2017 and since then it has gone as low as €1.0740 for £1.
The US dollar's week was one of mixed fortunes, most of which were not to its benefit. Only the Japanese yen had a worse run, and that was primarily the result of goings on in the States. On Thursday, after weeks of humming and hawing, the US president signed off in principle on a phase one trade deal with China. As yet, Beijing has had nothing to say on the matter. However, the assumption is that no new tariffs will come into play on Sunday.
US economic data were mostly anodyne, with inflation roughly in line with forecast at 2.1%, though last Friday's employment report was much stronger than expected. As expected, the Federal Reserve left its benchmark interest rate unchanged on Wednesday and most participants expect it to remain steady through 2020.
An unremarkable run left the euro on average unchanged against the other major currencies. It lost three and a fifth cents to sterling and added three quarters of a US cent. The German output data were the usual but two surveys of investor sentiment revealed an upswing in optimism.
When Christine Lagarde held her first press conference as president of the European Central Bank, she dismissed the characterisation of either hawk or dove, preferring to see herself as a (wise) "owl". She offered no other guidance on monetary policy beyond observing that risks "remain tilted to the downside but have become somewhat less pronounced".
Where America reported strong employment data last Friday, the numbers from Canada were far from positive. Unemployment rose from 5.5% to 5.9% as 71k jobs were lost in November.
The Loonie lost ground to the US dollar as a result of the mismatch but made it all back in the second half of the week, helped by news of Washington's trade deal with Beijing. Overall the Canadian dollar was just about unchanged against the Greenback and lost four cents to the resurgent pound.
The Aussie looked soggy against the US dollar during the first half of the week before moving higher on Wednesday and Thursday. It eventually added four fifths of a US cent and lost two and third cents to sterling. Behind the pound and the Swedish krona it was the third strongest performer.
Other than a 2.4% quarterly increase in house prices, there were no "hard" Australian ecostats. Business and consumer sentiment remain weak, with business conditions appearing to have "stabilised at a low level" and consumer confidence "still falling".
There was little to separate the Kiwi from the Aussie. The NZ dollar did fractionally less well than its neighbour, adding two thirds of a US cent and falling three cents against sterling.
News of the Sino-US trade agreement was positive for the Kiwi, as it was for all the commodity-oriented currencies. The only NZ statistic of any consequence was Business NZ's purchasing managers' index. At 51.4, it was more than a point lower on the month but still better than expected.