Brrrr…exit

It had to be done

The usual logic of buy the rumour, sell the fact, did not hold good yesterday and overnight. Investors have had ample time to accustom themselves to the idea that Britain has voted to leave the EU. Even so, they still felt the need to express themselves after they saw a picture of the prime minister signing a letter to the European Council president. Sterling spent most of Tuesday on the retreat and took another dive around midnight. It strengthened against the rand but that was as good as it got.

The pound fell by an average of -0.8% on the day, losing one euro cent and one and a half US cents. There were no UK economic data or news to justify the pound's decline; it looked as though the market was simply doing what it thought was required of it. Let's call it dog whistle trading.

Clean coal, really clean coal

The US president's announcement that fossil fuels are back on America's heating menu helped send the dollar half a cent higher against the euro. Well, at least it did not hurt the Greenback, but the main push came from the Conference Board's index of US consumer confidence, which rose to a 16-year high.

At 125.6 the index was more than ten points above the 114 forecast by analysts. There was also a 16-year high for the differential between perceptions that jobs are "plentiful" (31.7%) and that they are hard to get (26.9%). The other US data were also broadly positive: house prices were up by an annual 5.7%, the trade deficit narrowed and the Richmond Fed's manufacturing index improved by five points to 22.

For a second day the south African rand was lumbered with the wooden spoon. In two days it has fallen by almost -4%. Investors remain unconvinced that finance minister Pravin Gordhan is secure in his post following his recall from an international investor roadshow. 

The Brussels dispatch

With UK mortgage approvals and US pending home sales featuring as the "highlights" on today's agenda, investors are unlikely to devote too much effort to scrutinising the ecostats. They will, however, have a mawkish fascination with the progress of Ms May's Article 50 letter from London to Brussels.

When, at the beginning of last week, the prime minister said she would start the Article 50 process on 29 March the pound moved lower. The surmise at the time was that it would fall again when she pulled that trigger. Sure enough, it has.

As they have so often demonstrated, investors are perfectly capable of kicking sterling when it is down. But but where will it go from here?