Sterling still unsettled

Pound survives so-so jobs

Ringing Bells, an Indian technology firm, has been overwhelmed by would-be customers since it launched its first smartphone, the Freedom 251. It's all down to price: the Freedom 251 comes at 251 rupees. That is less than 1/200th of the cost of an IPhone 5. 

Of course cheapness does not guarantee a queue of eager buyers, as sterling has found to its chagrin this year. Since the beginning of January the pound has lost ground to every other major currency, falling by an average of -4.1%. It was on the retreat again yesterday with an average loss of -0.6%,

Judging by its briefly positive reaction at the time, sterling was not hurt by the vaguely unsatisfying UK employment data. They showed wage inflation slowing to 1.9% and unemployment failing to deliver the expected fall from 5.1% to 5% despite 15k fewer jobseekers. But it was sentiment, not statistics, that depressed the pound.

Heads you lose

On Tuesday sterling lost out because of the broad deterioration of sentiment that resulted from a lame agreement to limit oil production. On Wednesday it was held back by an improvement in sentiment when Iran expressed support for an output cap. 

It does look at the moment as though, whichever way the coin falls, sterling is the loser. However, at least on Wednesday it did not have to suffer alone. Investors decided that Teheran's entry into the oil production debate was a good thing for oil prices and, therefore, for equities and "risky" assets. So the commodity currencies moved strongly ahead while the safe-havens and the Europeans were left behind. 

The South African rand got the best result, strengthening by 2.1%, while the Swiss franc brought up the rear, down by two thirds of a cent. Sterling was unchanged against the US dollar and the Japanese yen and it picked up a quarter of a euro cent. The Aussie was up by nearly two cents despite a one-cent setback when this morning's employment data showed an unexpected loss of 8k Australian jobs.

Minutes and meetings

The FOMC minutes came out yesterday evening and the ECB governing council "account" will emerge at lunchtime. This afternoon the European Council will begin its discussion of the concessions and changes requested by Britain's prime minister. Market participants are not holding their breath. 

As investors had suspected, the mood of the Federal Open Market Committee changed quite markedly between December and January. January's minutes suggested that investors are right to expect no more than one US rate increase this year. The European Central Bank minutes are likely to be cautious too, setting the scene for lower rates and increased quantitative easing next month.

The European Council gathering in Brussels is not expected to throw up anything dramatic or game-changing. It might not throw up anything at all until tomorrow. But the meeting provides a reminder of the uncertainty surrounding Britain's position in the EU and that is unsettling for sterling.