The long goodbye

We wuz robbed

The political vacuum in Westminster continues to suck sterling downwards. Although off the lows of Monday evening the pound has lost ground to every other major currency. The credit agencies don't like the situation: Britain lost its last remaining AAA rating yesterday and two other agencies have the country on negative watch. Investors don't like it: they marked down sterling by an average of -0.6% against the other dozen most actively-traded currencies.

European leaders certainly don't like it, as they will quite possibly make clear to the prime minister when he dines with them in Brussels this evening. Publicly they are saying that secession negotiations cannot begin until the UK government officially announces that it is leaving Europe. 

A long wait

It is Tuesday, four days after the referendum result became known. David Cameron's replacement is scheduled to be in post on 2 September, 66 days hence. Imagine if the events of the last four days were to be extrapolated for another 66.

The run-up to the referendum provided ample evidence, should it have been necessary, that investors abhor uncertainty. Price action since Friday morning drives home the point. Soothing comments from chancellors and central bank governors will not be sufficient to restore confidence as long as the future of the country remains a blank canvas.

The rest of the world

South Korea has announced a $17bn (£17bn) stimulus package to boost growth and jobs. It did so "in consideration that worries are growing over the possible contraction of growth and employment in the second half due to Brexit". South Korea's president is obviously more worried than Britain's government.

The other president in evidence today will be Mario Draghi, he of the European Central Bank. Sig. Draghi will be talking about "The future of the international monetary and financial architecture". That's really quite heartening: At least Mario still thinks it has one.

Investors might also take time out to cast an eye over some of the ecostats on offer. There are retail sales figures from Spain and Sweden, confidence readings from Italy and inflation data from Iceland. The US data cover house prices, consumer confidence and first quarter gross domestic product. Analysts forecast that annualised GDP growth in Q1 will be revised upwards from 0.8% to 1.0% (0.25% QoQ).