In a speech entitled The Great Divide yesterday Andy Haldane, the Bank of England's chief economist, groused about the impenetrable jargon foisted upon customers by financial companies. So, in the spirit of the greater clarity called for by Mr Haldane: Sterling strengthened yesterday because there were more buyers than sellers.
Pedants will argue that the numbers of buyers and sellers must be equal, so let's rephrase that: buyers were more aggressive than sellers. A lot more aggressive in this case: sterling strengthened by an average of 2% on the day, blowing every other currency into the weeds. Among its scalps were one and a half US cents, two euro cents and three yen. That would have been a huge achievement had it depended on Wednesday's rather ordinary UK employment data.
But darker forces were at work. Sterling's sharp rally was sparked by an opinion poll in the Evening Standard. It showed 55% of respondents wanting to Remain in the EU and 37% preferring to Leave, giving the Remainers a much bigger lead than previously. The only surprise about the reaction of investors was its magnitude: It is hard not to suspect that sterling's surge might have been a bit overcooked on the back of just one opinion poll.
It could be June
Taking second place for the day, the US dollar mitigated its loss by half a cent when the Federal Open Market Committee published the minutes of April's meeting. They gave further credence to the possibility of a rate increase next month. The word "June" cropped up no fewer than six times.
Until the FOMC minutes came out at 19:00 yesterday evening the dollar had been steady against the euro. It promptly strengthened by half a cent. The minutes were not unduly hawkish: the committee still expects "only gradual increases in the federal funds rate". But their tone was direct enough to change investors' outlook. At the beginning of this week they saw a 4% chance of a June rate increase; this morning they put it at 32%.
The Brexit opinion poll and the FOMC minutes were the only games in town. Nobody could get excited about data that put euro zone inflation on target at -0.2% and there were no other meaningful ecostats to be seen.
Back on the defensive
After the pound's stunning performance on Wednesday its challenge today will be to hold onto the gains. The scheduled potential stumbling block is this morning's UK retail sales figures: the unscheduled one is the next opinion poll.
The Australian jobs data earlier this morning were vaguely disappointing, with employment rising by less than forecast. However, they did considerably less damage to the Aussie than the FOMC minutes, which cost it more than half a US cent. Beyond UK retail sales, today's only other ecostats are for US jobless claims.
Investors will pay close attention to two FOMC members who have speaking engagements this afternoon; Stanley Fischer and Bill Dudley. Both have votes.