After two decades of construction the 57km-long Gotthard railway tunnel opens today. Trains can travel through it at 155mph, slashing 52 minutes off the commute between Milan and Barnsley. When work began in 1996 a pound would buy SFr1.85 or US$1.55; the euro did not exist.
Today a pound will buy CHF1.44, US$1.45 or €1.30. That is considerably less than it would have bought yesterday morning. Sterling's smallest loss since then is the -1% by which it is down against the Canadian dollar. Its biggest is -2% against the NZ dollar and it has fallen by an average of -1.4%, putting it at the rear of the field for the day and the week.
The pound started Tuesday on the defensive after an opinion poll in the Daily Telegraph showed a narrowing of the advantage of Remain over Leave. It was put to flight later in the day by another poll, this time in The Guardian, that put the Brexiteers four points ahead of the Remainists with a 48%-52% split. The unexpected result shattered the casual confidence of investors who had come to believe a vote to remain within the EU was in the bag.
The yen was already in the lead this morning when Japanese Prime Minister Shinzo Abe announced yet another delay to the sales tax increase, from 8% to 10%, originally scheduled for October 2015. Instead of happening next April it has been put back to 2019.
The delay has negative implications for Japan's budget deficit. However, the feeling is that by not imposing an early increase Abe San is avoiding the risk of pushing the economy back into recession, as happened the last time the tax was increased two years ago. The fiscal stimulus implicit in the move will also reduce the pressure on the Bank of Japan to expand its own monetary stimulus. As a result the yen is up by 2% on the day.
The NZ dollar was close behind the yen and the Aussie added 1.7%. In the peloton there was no real competition between the US dollar, the euro, the franc and the Scandinavian crowns, all of which rose by around 1.2%. The Canadian dollar was at the back of that group, handicapped by news that Canada's economy expanded by only 0.6% in the first quarter.
PMI time again
It being the first of the month, investors will be focusing today mainly on the round of purchasing managers' indices, most of them relating to the manufacturing sector. Nationwide has already printed its UK house price index for May, which was 4.7% higher on the year.
Britain's manufacturing PMI is pencilled in at 49.6, one point behind the States, two behind Euroland and three behind Germany. There are also UK data this morning for money supply and mortgage approvals
Whilst the pound could react to today's UK ecostats, the biggest risk it faces is that another poll puts Leave in the lead. Fill more sandbags.