Theresa May’s clarity boosts Sterling

• Theresa May’s clarity boosts Sterling
• UK Unemployment data expected to add to GBP strength
• No change expected from Bank of Canada

British Prime Minister, Theresa May, delivered her Brexit plans yesterday, including putting the final settlement agreement to Parliament for scrutiny, although that parliamentary decision will not stop the UK leaving the EU.
 
Mrs May also made it clear that Britain’s departure from the EU would not leave a foot in the door. It will be a divorce and not a trial separation, but Britain will, in the PM’s view, continue as an outward looking trading nation, with a desire to do more business and not less; and to continue to be a good neighbour to Europe.
 
The markets were happy with what they heard. Sterling rose by a cent against the Euro and two cents against the US Dollar as the Prime Minister was speaking; and the confirmation of parliamentary oversight of the final EU negotiations caused the greatest spike. Today brings UK Employment data and that too should give the Pound a fillip. Average earnings are expected to be up and unemployment down. GBP buyers may wish to act early to avoid any shocks.
 
This afternoon brings US Inflation data. We already know the US Federal Reserve is looking at the timing of another interest rate hike and today’s data should show consumer prices rising at 2.1% on the year. That is one piece of the jigsaw that encourages hawkish views. We will also get US industrial production and that too is forecast to be positive.
 
The Bank of Canada (BoC) will make its interest rate announcement this afternoon. No change is expected, but with energy prices rising and income from raw material exports doing likewise, the Canadian economy must be assuming the next interest rate movement will be upward. Whether we’ll glean any hints from the BoC is unknown.
 
Most of today will be dominated by the UK/EU Big British Brexit speech from yesterday. The EU’s reaction is as diverse as anything else the EU has ever done. The start of any negotiation is about the posturing. All we can hope is that the miffed elements in the EU aren’t inclined to cut off their noses to spite their faces and that babies aren’t thrown out with the bathwater and that carts aren’t put before horses… and all the other tosh that gets thrown into speeches at times like these.
 
And it is only two days before the new President assumes office in America. There is no funny punchline. I just thought I would mention it.
 

Passing security

 
A Professor of Maths is passing through security before flying to a conference on statistics. As they scan his hand luggage, they discover a bomb. The departure area is sealed off immediately and the Professor is handcuffed before being taken to an interrogation room. The bomb team are brought in to make the device safe.
 
"I don't understand this at all,” says the head of the interrogation team. "You're an accomplished professional, a caring family man, a pillar of your community – and now you want to destroy that all by blowing up an airplane while you are on it!"
 
The professor interrupts him. "You’ve got it all wrong. Let me explain. Statistics show that the probability of a bomb being on an airplane is one in a thousand but the probability of there being two bombs on a plane is one in a million. So if I bring my own, everyone is much safer.”
 
 

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