Lucky escape for the GBP

3 minute read


The dollar was Monday's clear leader, reinforcing its place as the week's top performer. It strengthened by an average of 0.4% against the other majors. No new US economic data were available to investors, though they were treated to the first public appearance of new Fed governor Michelle Bowman. Sticking to the chairman's script she said the economy is "in a good place", as is Fed policy. In so saying, Ms Bowman aligned herself with the Patient ones.

Meanwhile in Washington, Congress is said to have come to a budget accommodation with the White House that should avert a second government shutdown. There was still no wall for the president but the House did allow him a truckload of sheetrock.


For a second day the euro had nothing to say for itself, at least as far as the economic data were concerned. Its continued silence was rewarded with a 0.3% decline against the USD.

Luis de Guindos, the vice president of the European Central Bank, turned out to make a speech in his hometown, Madrid. He reiterated the ECB's policy line that interest rates will stay where they are "at least through the summer" and reassured his audience that bank officials are reviewing all incoming data on the euro-area economy "carefully".  


There were signs of movement by the CAD but they did not amount to anything. The Loonie was unchanged against the USD. Despite impressions it might have given to the contrary, it is almost unchanged from a month ago, down by just half a US cent.

There were no Canadian ecostats to amuse investors and little movement in oil prices. WTI crude added a grand total of 20 cents, 0.4%.


Miraculously, sterling lost 0.4% to the USD. It was a miracle because to achieve that result the GBP had to dodge a lot of bullets. On top of the flood of discouraging UK economic data, a report from parliament's Treasury Committee did a hatchet job on the government's economic policy and the chancellor of the exchequer himself. The committee took particular exception to the chancellor's reference to a Brexit "deal dividend". It said he was disingenuous to characterise the avoidance of catastrophe as a benefit.

Today is a data-free zone for sterling but the Bank of England governor will be up to talk about the global economy this morning. At the same time the prime minister will be telling parliament about her latest Brexit strategy. She is not expected to say anything new.


Having broken the ¥110 USD/JPY barrier yesterday the yen continued to drift lower during the US session and overnight. It is 0.3% lower on the day, at its weakest level this year.

Today's Japanese data covered machine tool orders and the services sector's Tertiary Index, both for January. Machine tool orders were down by an annual 18.8% and the index was unchanged at -0.3. Neither figure had any obvious influence on the JPY.

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