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Sterling slips a little on Brexit vote defeat

Published: Friday 15 February 2019

Global slowdown in neon lights

The global slowdown was highlighted very clearly overnight. The consumer inflation rates slowed in China for January and Singapore for Q4. Add in another contraction in Korea exports, another fall in Japanese industrial production and a contraction in their capacity utilisation and the writing is not only on the wall but also lit with neon.
No surprise Euro has slipped against US Dollar

In the EU, Spanish consumer prices deflated at gathering pace in January. That 1.3% decline was largely in line with expectations, but three times as bad as December’s data. We will get the Eurozone trade balance data this morning and, with Germany’s declining economic data, we can expect poor results from that. It is no surprise the Euro has slipped against the US Dollar along with Sterling.
Also no surprise Sterling has slipped

Against this backdrop of slowing global performance and with the ever present hassles involving the ‘B’ word, it is no surprise the Pound hit another speed hump yesterday and slipped against all-comers. Sterling starts Friday in the UK below $1.28 and just above €1.13. It has also fallen a little against the Australian, New Zealand and Canadian Dollars amongst others.

The highlight – or maybe the lowlight – for today will be this morning’s UK retail sales data. The forecasts were for a slight improvement on December’s disappointing data, and the reported increase of 1% is welcome news for the Pound, although markets are more preoccupied with the Government’s latest defeat on their revised Brexit plan and whether the future is with a deal or no deal. The defeat was a knock back for the Prime Minister, but largely unsurprising; hence the Pound only trickled a little lower.
US Dollar could fall back a little

US data today takes the form of what is expected to be poor industrial production and, by way of contrast, consumer confidence that is forecast to be very positive. As always, if the forecasts are wrong and the data disappoints, the US Dollar may take a step back. That isn’t likely to be a big step, though, because the USD is still sought after when global conditions deteriorate.
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Lessons learned?

And on this day in 1971, UK currency became decimalised. A shilling became 5p and ten bob notes were replaced by 50p pieces. We lost the farthing and gained 20p pieces (4 shillings in old money). And all the prices rose a little. I was quite young then, but I still remember my mum moaning about the cost of everything going up. Thank goodness we all understand money now and inflation is a thing of the past. Phew!

Animals in class

The primary school teacher was showing pictures of animals to the children to see how many they could name. She held up a picture of a lamb, and a little girl said, "That's a sheep!"
"That's right!" said the teacher. "How about THIS one?" she said, holding up another picture.
"That's a lion!" answered a little boy. “They go Roar!”.
"Right!" said the teacher. Then she held up a picture of a deer. No one volunteered an answer. She tried to help. "What does your mummy call your daddy?"
Johnny said, "Wow, so that’s what a scumbag looks like.”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Retail Sales -0.9% 0.2%
EUR 10:00 EU: Trade Balance 15.1b 15.6b
CAD 13:30 Canada: Foreign Securities Purchases 9.45b 7.66b
USD 13:30 US: Import Prices -1.0% -0.1%
USD 13:30 US: Empire State Manufacturing Index 3.9 7.1
USD 14:15 US: Industrial Production 0.3% 0.1%
USD 14:15 US: Capacity Utilization Rate 78.7% 78.8%

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