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August

Sterling slips on further Brexit banter

Published: Thursday 09 August 2018

  • Sterling slips on further Brexit banter
  • US Dollar strengthened by safe haven buying
  • New Zealand interest rates could go up or down – it’s official
​​By David Johnson

Sterling slips on further Brexit banter

Sterling looks battered and bruised in the midst of a week in which anger and division have trumped (small T) rational thought when it comes to the Brexit negotiations. The pounded Pound starts the day below €1.11 and $1.29. Sterling is also down against the Australasian and Canadian Dollars and many others ahead of the expected rebellion Theresa May faces at this week’s Tory Party Conference in Birmingham. 
 
In the midst of this the RICS reported that house prices in the UK inched higher but were slowed by a number of landlords exiting the buy-to-let market as less favourable tax rules weighed and London prices edged lower from their overheated highs.
 
No clues for New Zealand Dollar

Overnight the Reserve Bank of New Zealand stated the obvious and said that their next interest rate move could be up or down. Wow, that’s an insight. Either way, they left the base rate on hold at 1.75% against a backdrop of 1.5% inflation, which does look like it would incite an upward rate movement any time soon. The Kiwi Dollar was largely unruffled by the ambivalence of the statement. We will see if the New Zealand Purchasing Managers’ Index is as balanced overnight tonight.
 
US Dollar beating down the competition

Sterling and the Euro are both down against the US Dollar, which has strengthened as investors seek the safety of the US Treasury market whilst the US President loads another flame thrower in his bid to create an all-out global trade war. Maybe he, like WOPR (War Operation Plan Response), the computer in the film War Games, will realise that mutually assured destruction isn’t a good option after all.
 
You have to wonder what damage will have been done in the interim though. Oddly enough, it probably helps the UK in its Brexit negotiations. If the US is going to be the problem child, countries need as many sane trading partners as possible and the UK is a very wealthy consumer.
 
UK data diary for today

Today’s data diary should include the National Institute of Economic and Social Research (NIESR) estimate of UK economic growth for July. A small uptick is expected from 0.3% to 0.4% and that may allay some concerns over Sterling.
 
Pound clawing back against Euro on Eurozone concerns

We have already had the European Central Bank’s economic bulletin, within which they voiced concern that the downside risks to global growth have intensified. They too cited the US’s protectionist measures as a threat to global growth and to the EU economy as a result. That has contributed to the weakness in the Euro and, as I write, the Pound has clambered back above €1.11 by its fingernails.
 
US data thin on the ground
 
This afternoon’s US diary is quite thin, but the Producer Price Index and new unemployment benefit claimants are the key data elements.
 
In Memoriam

And rest in peace, Jarrod Lyle, the Australian golfer who passed away yesterday at the tragically young age of 36. I mention his passing specifically because of what he said to his wife before he died, 'My time was short; I hope it wasn't wasted'. Very sad, but very definitely words to live your life by.
 

Bank Robber

A hooded robber burst into a Texas bank and forced the tellers to load a sack full of cash.
On his way out the door, a brave customer grabbed the hood and pulled it off revealing the robber’s face. The robber shot the customer without a moment’s hesitation.
He then looked around the bank and noticed one of the tellers looking straight at him.
The robber instantly shot him also. Everyone else, by now very scared, looked intently down at the floor in silence.
The robber yelled, ‘Well, did anyone else see my face?’
A woman’s hand went up in the corner of the banking hall. The Robber noticed and looked across. As he did so, the hand lowered and pointed to a man nearby. As she did that, the woman said, ‘My husband got a damned good look.’ 


 
 
For more information, infographics and the latest currency insights, visit www.halofinancial.com/news