Whatever it takes?

Love it

In celebration of her 90th birthday the Queen has awarded Royal Warrants to some of her most trusted suppliers. The most surreal among them is to Comfort, a fabric conditioner (well, just try to imagine it). The bravest is to that most divisive of brands: No, not sterling, Marmite.

It often seems as though investors must either love sterling or loathe it, completely lacking any capacity for indifference. The Yuk reaction has been dominant during most of 2016 but in the last few days there have been signs of a softening of that revulsion. The pound might not have been the most successful major currency this week but it has comfortably outperformed the big three; the US dollar, the euro and the Japanese yen. Since Monday it has strengthened - or, more accurately, recovered - by an average of 0.4% against the other dozen most actively-traded currencies.

But let's not get carried away: the week has also been kind to other "risky" currencies, not least the South African rand, which is up by 1.7% against the pound. The sensation is that sterling's upward move is more a symptom of profits being taken on short positions than a sign of fresh enthusiasm among investors.

No refuge needed

The leaders on Wednesday were the rand and the Canadian dollar. Both strengthened by about 1% in response to a 5% rally in oil prices. That same rally held back the safe-haven currencies, the Japanese one falling by three quarters of a yen and the Swiss one by more than a cent.

Yesterday's economic data broadly supported the mood of guarded optimism. South African inflation slowed from 7% to 6.3%. Swiss business confidence improved. US existing home sales rebounded by 5.1%. Business confidence in Australia was steady. The only fly in the ointment was an unexpected -2.2% monthly fall in Canadian wholesale sales.

Britain's employment data were vaguely disappointing, with basic earnings growth slowing from 2.1% to 1.8% and 6,700 more jobseekers signing on. However, gross earnings including bonuses were up by an unchanged 2.2% on the year and unemployment was steady at 5.1%, its lowest level since before the financial crisis.

All about Europe

European numbers and events dominate today's agenda. There are monetary policy decisions from Sweden's Riksbank and the European Central Bank, retail sales data from the United Kingdom and a cameo appearance by the Bank of England governor in New York.

In three of the last six months UK sales have risen; in three they have gone down. Analysts expect today's numbers to show a second consecutive decline, which would not be a great deal of help to sterling.

The first central bank announcement is an unknown quantity, though recent changes to Sweden's inflation targeting should mean no alteration to the Riksbank's benchmark interest rate. No change is expected from the ECB either but investors will be looking for hints at increased stimulus in the future. If not, up goes the euro.