Sterling's relaxed weekend 

Actions v words

Sterling looked relatively relaxed at the end of last week. There were only a couple of UK ecostats in its way; the CBI's Distributive Trades Survey, which was helpful to the pound, and GfK's consumer confidence measure, which wasn't. Compared with Thursday morning's levels the pound starts this week an average of 0.3% firmer.

The CBI reported stronger than expected figures for July, saying "Summer sunshine spurs retail sales growth". The result was at odds with GfK's index of consumer confidence for the same month, which touched a four-year low. It is difficult to reconcile consumer's supposed lack of confidence with their readiness to splash the cash but that is apparently what went on.

Investors preferred to focus on the retail sales data, which quantify actual spending, rather than the more subjective sentiment figure. Between Thursday and Monday morning the pound was unchanged against the euro and the US dollar and higher against the commodity-oriented currencies, which lost ground as the yen edged ahead. 

Swiss retreat

The biggest loser last week was the Swiss franc, down by -3.2% against sterling. The move appeared to be the result of a reappraisal of the Swissy's advantages over the euro, which look less compelling today than they did a year or two ago. 

The European Central Bank has yet to begin the wind-down of its quantitative easing programme but there can be little doubt it is leaning that way. The Swiss National Bank, on the other hand, shows no sign of bringing an end to negative interest rates. Add to that the accelerating €Z economy and the absence of new panics about Club Med economies and flaky banks, and the franc is no longer the default European currency of choice.

It is unclear whether the SNB had a hand in the Swissy's precipitate retreat: it has said often enough in the past that the franc is overvalued and it has a history of intervention but there is no evidence that it was involved last week. What the SNB will be doing now, though, is re-evaluating what it perceives to be a defensible level for the franc against the euro. The likelihood is that the Swissy will be weaker in the next 12 months than it was in the last 12.

Euroland inflation

A slew of data appeared in the Far East this morning, rather as though the numbers were being rushed out to meet a month-end deadline. They did not add much to the fund of human knowledge and the rest of the day's ecostats promise to be fairly ho-hum too. 

Even the provisional Euroland consumer price index figures will only have an appreciable impact if they show a marked changed to the 1.3% rate of inflation. They will have little influence on the ECB's QE decision.

The Reserve Bank of Australia is expected to leave its Cash Rate unchanged at 1.5% after tonight's board meeting. Any other outcome would be a major surprise.