Brexit nerves again

Sterling poll-axed

On Friday The Independent published the result of an opinion poll it had commissioned, which showed 55% of people wanting to Leave the EU and 45% in favour of Remaining. The ten-percentage-point gap rattled investors and sent sterling lower. Polls yesterday for The Observer and The Sunday Times delivered much closer, but contradictory, results. The former had 44% in and 42% out; in the latter the split was 42% to 43%. (Bookmakers put the odds against Brexit at 2/1.)

Sunday's results protected sterling from further damage this morning in the Far East but did little to heal the wounds it had suffered on Friday. Compared with Friday morning the pound is down by an average of -1.2% against the other dozen most actively-traded currencies. Its losses include two and a half US cents, two and a half Swiss cents one and three quarter euro cents and four and a quarter Japanese yen.

Safety first

There was a general mood of risk-aversion on Friday. It was of greatest benefit to the Japanese yen while emerging market currencies bore the brunt of the negative sentiment. At opposite ends of the scale the yen strengthened by 3.6% against the South African rand.

There was nothing on the ecostat agenda to engender any great interest. German wholesale prices were down by -2.3% on the year while headline inflation was either 0.1% (CPI) or 0% (HCIP). Inflation in Norway was considerably higher than that at 3.4%. The Loonie perked up on news that Canadian unemployment had fallen from 7.1% to 6.9% with the addition of 4k new jobs in May.

The Bank of England's survey of inflation expectations found the median person in the street expecting consumer prices to rise by 2% in the coming year. That will be heartening to the bank even though people evidently haven't got a clue about inflation: the same survey group estimated the current rate at 2.2%, whereas it was actually 0.3% at the last count.


Today's list of significant economic statistics and events is not quite empty but none of them will be going on during the London session. 

Earlier this morning China reported a 10% annual increase in retail sales and a 6% rise in industrial production, both of which were exactly in line with forecasts. Urban investment in construction and other fixed assets was up by a slightly disappointing 9.6%. 

The next ecostats to appear will be from the antipodes tonight. New Zealand leads off with the food price index, followed by the REINZ house price index. The Australian data cover inflation expectations and business confidence. Absent any new and damaging opinion poll sterling might be able to hold itself together until then.