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Sterling wobbles on Gross Domestic Product downgrade

Published: Friday 23 February 2018

  • Canadian Dollar slips on poor retail data
  • New Zealand retail sales surge
  • Euro volatility likely around Eurozone inflation data
By David Johnson

A small downgrade in the UK’s Q4 economic growth caused a little excitement yesterday but the Pound’s dip was quite short lived. There was a little good news this morning though as Royal Bank of Scotland reported its first profit in 10 years. That comes a few days after a report showing the scale of the mistreatment of small businesses by the group over an 8 year period from 2005. Further fines may mean the British taxpayers will have to wait a while longer to get their investment into the bank, back.
Canada’s retail sales fell in December by 0.8% and that was much worse than forecasters had envisaged. In fact, the consensus forecast was for a 0.2% rise. That has damaged the Canadian Dollar a little, but the influence of the USD on Canada’s currency is probably a greater factor. This afternoon’s Canadian inflation data should reflect a bounce back and a return to price rises after last month’s decline.
New Zealand’s retail sales grew at a faster pace than forecast in Q4 and that has given the New Zealand Dollar a little fillip this morning. A notable increase in restaurant spending helped the number climb, but there were increases in almost all areas of the economy.
There isn’t a lot of news today but Eurozone inflation is worthy of note. The short term data is expected to show a drop in inflationary pressure but we don’t yet know whether that will be significant enough to reduce the annualised headline figure of 1.3%. However, we got a very strong German Gross Domestic Product data release this morning and that has steadied the Euro. The GBPEUR rate is in the mid 1.13s and the EURUSD rate is hovering below 1.23.
And then the weekend arrives, a cold one as far as the UK is concerned. But maybe yours will be a lucky one, like astronomer Victor Buso, who was photographing the sky at exactly the right point (80 million light years away) and at exactly the right time to snap before and after shots of a star exploding and turning into a supernova. It is the first time this has ever been witnessed. The new Supernova is called SN 2016gkg but surely it should be Buso-nova; he is from Latin America after all.
Political jokes 
  • The Pentagon is changing the nuclear codes to over 140 characters, … so Trump can’t tweet it.
  • What’s the difference between a politician and a flying pig? – The letter F.
  • The BBC has reported that the weather will be so cold this weekend, we may see some politicians with their hands in their own pockets.
  • I asked my North Korean friend how it was there. He said he couldn't complain.
  • The Brexit vote united the UK. 100% of us thought 50% of the rest of us were insane.
  • Politics is the art of looking for trouble, finding it, misdiagnosing it and then incorrectly applying the wrong remedies…..again and again

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 10:00 EU: Final Consumer Price Index 1.3% 1.3%
CAD 13:30 Canada: Consumer Price Index -0.4% 0.4%
CAD 13:30 Canada: Core Consumer Price Index -0.5% -0.5%
CAD 13:30 Canada: Common Consumer Price Index 1.6% 1.6%

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