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January 2017

Sterling up after Article 50 doubt removed

Published: Wednesday 25 January 2017

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  • Sterling up after Article 50 doubt removed
  • Aussie inflation slows

As suspected, the removal of the uncertainty over the triggering of Article 50 has allowed the Pound to regain some of its lost ground. The pound is ahead against most other currencies in spite of the barrage of negative reactions to the Supreme Court ruling. It is difficult to know whether this morning’s UK industrial trends report from the CBI will benefit or damage the Pound but, if other UK data is any kind of guide, the Sterling advance may well get a boost. Traders could, though, keep their powder dry until tomorrow’s first estimate of the UK’s Q4 economic growth. It is forecast to be a smidgeon weaker than Q3, but that would be better than some analysts predict.
 
Australian headline Consumer Price Index (CPI) figures rose 0.5% in the three months to December 2016. That was well below expectations and the Australian Dollar is a little weaker as a result. It is pretty certain that the Reserve Bank of Australia will not see fit to raise the Aussie base rate through 2017 unless something significant happens to the economy.
 
European data today is sparse, but the German Ifo institute’s business expectations index is forecast to be rather more upbeat that the previous month, so there is scope for the Euro to strengthen a tad. It is being flattered by the fall in the value of the US Dollar, though.
 
Having said that, the new US President seems to be on a mission to scrap as many laws as he can and to implement the daftest of his election pledges. He is expected to sign an executive order today to actually build the wall between America and Mexico. Hadrian….Sorry…Trump is now saying the Mexicans will pay for it by other means. So, by questioning the longevity of the North American Free Trade Agreement (NAFTA) agreement, cancelling America’s involvement in the Trans-Pacific Pact and bricking up the Mexican border, Trump is doing a great job of alienating his neighbours and trading partners. Good luck in Washington, Prime Minister May.
 
And it is being reported that sales of George Orwell’s book, 1984, have shot up since Donald Trump came into power. Might I also recommend Steven King’s novel, The Dead Zone. See if you can spot any familiar traits in Greg Stillson.
 

Trains

 
One day, a railway engineer calls the dispatcher and asks him for the time. The dispatcher responds by asking him which line he is covering. The engineer is baffled and asks “What difference does that make?” “Well”, the dispatcher says, “if you work for the London Tube Network, it’s 2pm; if you work for Thameslink it is 14:00; if you work for Virgin, the big hand is on the 12 and the little hand is on the 2; and if you work for Southern Rail, there are leaves on the line.”
 

Today's Major Economic Releases
 

Market BST Data/Event Previous Expected
AUD All Day Australia: Bank Holiday    
EUR 09:00 EU: German Ifo Business Climate 111.0 111.3
GBP 11:00 UK: Confederation of Business Climate Industrial Orders Expectations  0 2
USD 14:00 US: House Price Index month-on-month 0.4% 0.4%
USD 15:30 US: Crude Oil Inventories 2.3m 1.5m
NZD 21:45 New Zealand: Consumer Price Index 0.2% 0.3%
 
Daily Currency Analysis by David Johnson
 
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