A big day for sterling

Solar-powered tulip

Four centuries ago the bursting of a bubble in tulip bulb prices pitched Holland into the world's first financial crisis. On Wednesday Dutch MPs gave Mario Draghi a solar-powered tulip as a memento of his discussion with them and as a reminder of the dangers that cheap money can bring. They were not happy bunnies.

Like their neighbours to the east, the Dutch are distinctly uncomfortable with the European Central Bank's expansive monetary policy and its monthly purchase of €60bn in bonds. Parliamentarians gave him a hard time when they had the opportunity for an "Exchange of views with the President on the impact of monetary policy". They see record low interest rates as a tax on pensioners' and savers' wealth.

Investors' interest in the exchange of views was more specific: they wanted to know where the ECB president saw policy moving in the future, and when. In that respect Sig. Draghi was not forthcoming. He said it was still too early to call the quantitative easing scheme a success, pouring cold water on expectations that the bank might be about to wind it down. His comments did not trouble the euro, which was unchanged on the day against sterling.

More of the same

There was not much change yesterday. Give or take a dozen ticks the pound was steady against the US, Canadian and Australian dollars, the Swiss franc and, as noted, the euro. The rand enjoyed a second successive winning day while the Kiwi was unhorsed by the RBNZ.

As anticipated, the Reserve Bank of New Zealand kept its Official Cash Rate benchmark unchanged at 1.75% this morning. It did not, however, make the expected suggestion that inflation might lead to higher interest rates in the future. The omission cost the NZ dollar two instant cents and, on the day, it is down by a net cent and two thirds against the pound.

Wednesday's ecostats failed to excite investors. A 2.8% annual rise in Italian industrial production was eclipsed by the 8.7% increase in Greece. France's €5.3bn monthly trade deficit was double that of Portugal.

Production and policy

There are as many significant events and data on the UK agenda today as there are for the rest of the world put together. They fall into two categories: output and monetary policy. 

The manufacturing and industrial production figures appear first. There were disappointments a month ago with monthly falls for both in February. Analysts are not wildly optimistic about today's numbers for March either. They forecast a -0.2% fall in industrial production with the narrower manufacturing production expected to be flat.

At midday the Bank of England opens the floodgates with its interest rate decision, the minutes of the Monetary Policy Committee meeting and the quarterly Inflation Report. Although there is zero chance of a rate hike today Sterling's supporters will be hoping to see that at least one MPC member voted for higher rates.