Another day another poll

This time it's different

Yet another opinion poll appeared in The Times newspaper overnight. This one was carried out on a seat-by-seat basis and it introduced the prospect of no overall majority for the Conservative party next week. Investors recoiled instantly from sterling, knocking it half a cent lower.

The chance of a hung parliament is not something that had been factored into investors' calculations before last night. YouGov, the company that carried out the latest poll, concedes that there is a wide margin for error in the methodology: the number of Conservative seats could be anywhere between 274 and 345 (326 seats are necessary for a majority). Nevertheless, it has brought into play the possibility of a government that would be about as far from strong and stable as you can get.

Having spent Tuesday morning looking quite perky, the pound was forced to hand back those gains overnight and it starts Wednesday on the defensive. Sterling is unchanged on the day against the US and Canadian dollars and the Japanese yen and it is down by half a cent against the euro and the Swissy.

Fading inflation

On both sides of the Atlantic there were cautionary tales about inflation. Falling prices in Germany knocked half a percentage point off the consumer price index. In New York a Fed governor said persistently low inflation could affect the direction of monetary policy.

The 1.4% reported for the Harmonised Index of Consumer Prices (HICP) in Germany was lower than the forecast 1.6% and well down from the previous month's 2.0%. It followed the lead of Spanish inflation which, earlier on Tuesday, had fallen from 2.6% to 2.0%. Slowing inflation will make it easier for the European Central Bank to stick with its quantitative easing programme when the Governing Council meets next week.

Federal Reserve Governor Lael Brainard voiced a similar thought when she addressed the New York Association for Business Economics. Whilst agreeing that an interest rate increase is "likely [to be] appropriate soon", "if the soft inflation data persist, that would be concerning and, ultimately, could lead me to reassess the appropriate path of policy".

Okay China

The first ecostats of the day were from the UK. They showed a slight improvement in consumer confidence and a -0.4% annual fall for shop prices. At half past nine the Bank of England will reveal the figures for personal loans and mortgage approvals.

Purchasing managers' indices from China were reassuring: the manufacturing sector's reading was steady at 51.2 while services strengthened by half a point to 54.5. Business confidence in New Zealand was up from 11.0 to 14.9 and Japanese industrial production was 5.7% higher on the year.

Following on from yesterday's Spanish and German data the EC is expected to report €Z inflation slowing from 1.9% to 1.5%. There will be unemployment figures from Germany, Italy and Euroland.  After lunch Canada releases the figures for first quarter growth. An annualised 3.9% is pencilled in.