Now we know

All is made clear

Lest there be any doubt what Brexit means and when the process will begin the prime minister made it clear on Saturday. Brexit means Brexit and Article 50 will be set into motion early next year. Investors in the Far East this morning did not much like the sound of it.

Sterling opened in the antipodes lower across the board. It was more of mark-down than a concerted selling effort. Investors presumably felt duty-bound to do the deed now that a step - however small - had been taken down the path to Britain's departure from the EU.

Brexit breakthroughs aside, Thursday and Friday were roughly neutral for the pound. The economic data were, if anything, positive for sterling. Gfk's index of UK consumer confidence came in above forecast at -1 for a six-point improvement on the month. Nationwide said house prices were up by 5.3% on the year. The second revision to second quarter gross domestic product put growth a tick higher than before at 0.7%. Whatever Brexit means, the vote for it still seems to have done no real damage to the UK economy, though six more months of uncertainty are not likely to help sterling's situation. 

Confidence recovers

Concerns about the health of German banks gnawed away at investors' confidence towards the end of last week. The prospect of Deutsche Bank having to pay a $14bn fine to US regulators was particularly worrisome. But on Friday that mood improved when it looked as though the penalty would be slashed.

Word spread that Deutsche was in the process of negotiating the fine down to $5.4bn, a far more affordable sum. The bank's shares rebounded and, with them, the market's risk appetite. The South African rand, which has become a bellwether for emerging markets, was Friday's top performer having been tail-end Charlie on Thursday.

Investors were also pleased to see that Canada's economy expanded by more than expected in July, helping the argument that its contraction in Q2 was an aberration. Euro zone unemployment was unchanged at 10.1% in August and inflation was on target at 0.4%. In the States the Michigan index of consumer confidence was up by a point and a half at 91.2.

Manufacturers looking up

PMI Day got off to a good start with improved numbers from China, Australia, Japan and Sweden. Most if the rest of the day's purchasing managers' index readings from the manufacturing sector also look likely to be higher on the month or at worst unchanged. Sadly, the odd one out is Britain.

Having scored a 53.3 in August the UK manufacturing PMI is pencilled in at 52.1 for September. That would still be better than the numbers forecast for the United States but any softening would be unhelpful to the pound. 

The Swiss manufacturing PMI is estimated at 51.5. That might not be enough to boost the franc, which was Friday's biggest loser on rumours of Swiss National Bank intervention.