Trump's new buddy

Production issues
Monday was not a brilliant day for the pound. It fell by an average of 0.2% against the other ten most actively-traded currencies. But it could have been worse: the UK production data were dire and the NIESR put economic growth in the May quarter at just 0.2%.

Manufacturing production in the UK went down by 1.4% in April and the broader industrial production - including mining and energy - fell 0.8%. Italian industrial production decreased by 1.2% in the same month but that was of scant consolation to sterling and its supporters. The National Institute for Economic and Social Research did not help matters when it estimated a 0.2% quarterly expansion for gross domestic product in the three months to May: investors had been expecting something more like 0.3%, itself only a modest ambition.

Sterling dropped a third of a cent on the production data. It spent the rest of the day and most of the evening struggling to recoup the losses. Eventually the pound was just about unchanged on the day against the euro and half a cent lower against the US dollar. 

A worthy negotiator
The US president currently appears more comfortable with North Korea's leader than with Canada's prime minister. Following their discussion he described Mr Kim as "a talented man" with whom he had formed "a special bond" and did not abuse him at all. The biggest major-currency casualty of this new "bromance" was the yen.

Whatever the eventual impact of the agreement between Kim and Trump, its immediate effect was to dial down nervousness about North Korea's nuclear ambitions. Less tension means less call for the safety supposedly provided by the Japanese currency, and it lost a quarter of a yen on the day to sterling.

The only other currency that lost ground to sterling was the South African rand.  In four of the last five days it has been at the rear of the pack. Emerging markets are in general out of favour and there are particular questions about South Africa's credit ratings.

Jobs and wages
Another slow day for economic statistics could leave sterling exposed once again.  This time the topic is employment. Investors will be most interested in the pace of wage increases, and how it compares with consumer price increases.

A month ago the figures showed total earnings rising by 2.6% a year while basic pay, excluding bonuses, was up by 2.9%. Data the following day showed consumer prices rising by 2.4% (and retail prices by 3.4%, but people are not supposed to talk about the retail price index). Those numbers are predicted to be quite similar today and tomorrow. US inflation comes out this afternoon.

At least as important as the employment figures, the Brexit votes in parliament today will have significant implications for sterling. Not all of the results will be known by the end of the London session but, overall, the softer the Brexit the harder the pound.