Pound pounding paused

Investors Like the Loonie

Facebook has finally capitulated to customer demand for the facility to do other than simply "Like" someone's post. The cat-video website now offers half a dozen smilies in various degrees of smiliness, including what look like "Offended", "Depressed" "Horrified" and "Constipated". Sterling has been collecting all four this week.

It even picked up a couple of "Likes" on Wednesday, strengthening against the Japanese yen, the Norwegian krone and the South African rand. The rand was the biggest loser, falling by 50 cents for a daily loss of -2.2% after finance minister Pravin Gordhan presented his budget. It was not that investors disagreed with his aims: rather that they saw them as optimistic and potentially undeliverable.

At the head of the field the Canadian and New Zealand dollars vied for supremacy, both strengthening by 1.83 cents against the pound. The gain was worth 0.9% to the Kiwi and 1.0% to the Loonie, the disparity being a function of their different exchange rates. The Aussie kept them company until this morning, when investors were disappointed by the Australian private sector investment data, and it ended up with a gain of just half a cent.

Sterling takes a breather

The pound was a net loser for a fourth successive day but the damage was slight, with an average decline of just -0.1%. The Bank of England's Jon Cunliffe echoed comments made by his boss earlier in the week and the two minor-league UK ecostats were there or thereabouts.

Mortgage approvals by British Bankers' Association members in January numbered 47,509, not far short of the 50k post-recession high for the same month two years ago. The Confederation of British Industry's Distributive Trades survey posted a reading of 10 for February, a couple of points below forecast but still in the expansion zone.

Deputy Director Cunliffe supported the governor's view that, if the MPC should need to react to deteriorating economic conditions, "we have a range of tools at our disposal and should be ready to use them whichever risk materializes". It was not controversial stuff, especially given the governor's rejection of negative interest rates as one of those tools.

GDP take 2

The first revision to UK fourth quarter gross domestic product appears this morning, together with the figures for business investment. It will be followed by the finalised Euroland inflation data and, this afternoon, by US durable goods orders. 

Of the three, €Z inflation will be of least importance unless it surprises mightily on the upside. The European Central Bank is widely expected to relax monetary policy further next month whatever today's inflation rate. Of greatest interest to the wider world, durable goods orders are held to be an important barometer of US activity. Unfortunately they are nigh-on impossible for analysts to predict.

A month ago the first estimate of Britain's GDP showed quarterly growth of 0.5%. Today's revision is not expected to alter that number. But the investment data often disappoint.