Talking it down

Performance-depleting plugs
When Tom Daley takes a dive, as he did last night, he wins another Olympic medal. When the pound takes a dive, as it did last night, it wins another wooden spoon. The sad thing it that sterling's woeful performance could not have been achieved without external help.

The "help" came in the form of an article that Ian McCafferty, a member of the Bank of England's Monetary Policy Committee, wrote for today's Times.  In his piece Mr McCafferty echoed the negative sentiment expressed by governor Mark Carney last Thursday, saying "Bank rate can be cut further, closer to zero, and quantitative easing can be stepped up." His words had added impact because Mr McCafferty is no monetary dove: during his four years in office he has voted 11 times to increase Bank Rates, more than any of his colleagues.

So having been on a reasonably even keel during Monday's London and New York sessions the pound was marked down in the early hours of today when the Times hit the digital newsstands. It is lower by an average of -0.7% on the day against the other dozen most actively-traded currencies. Sterling's smallest loss was a third of a Swiss cent. Its largest was to the South African rand, against which it has fallen by 5.6% since Wednesday morning.

If only…
Things could have been so different for sterling had it not been for the intervention of the bank. The sole UK economic statistic in the last 24 hours was the BRC's Retail Sales Monitor, which was really quite good. 

The British Retail Consortium said retail sales in July were up by 1.1% over the same month last year. Compared with the forecast -0.7% decline that was no mean achievement but it was totally eclipsed by Mr McCafferty's thought for the day. 
In the Far East this morning Chinese inflation was a tick lower with an on-target 1.8%. Australian business confidence softened from 6 to 4, slightly denting the Aussie dollar.

Another history lesson
The UK manufacturing and industrial production data this morning relate to June, therefore to the halcyon days prior to the Brexit referendum. They will be interesting in their own way but will shed little light on the current situation.

For what it's worth, industrial production is supposed to have risen by an almost-invisible 0.1% in June while manufacturing output fell by an only slightly more visible -0.2%. Year-on-year the numbers are expected to be 1.6% and 1.3%. This afternoon's NIESR estimate of economic growth in the May-July quarter is pencilled in at 0.4%, slightly down on the 0.6% between the beginning of April and the end of June.

German data announced ahead of London's opening showed imports increasing three times as quickly as exports in June and Japan reported a continuing slump in machine tool orders: they were down by -19.6% on the year. There is nothing of major consequence on the agenda for Europe or North America.