- Sterling jumpy after unexpected 8-1 BOE rate vote
- USD strengthens ahead of Industrial production data
By David Johnson
Perhaps I am a party pooper, but I can’t understand the global celebration of St Patrick’s Day. St Andrew, St David and St George must wonder what they did to deserve such a snub. Nonetheless, a pint of the black and white stuff is de rigueur today, even if it is tinted green. Mind you, England will be aiming to end the party quite abruptly tomorrow, when they visit Dublin in an attempt to win back-to-back grand slams in the Six Nations and to break the All Black’s record for the most consecutive wins. Come on the men in white!
The markets have been focussed on London, where the Bank of England left their base rate on hold at 0.25% and kept their asset haul at £435 billion, but a lone voice in the Monetary Policy Committee called for a 25 basis point rate hike. Kristin Forbes thinks the time is right for a return to more normal interest rates, but she is alone in that thought at the moment. Sterling did initially strengthen on the news, but has slipped back again, as everyone fears the announcement of the triggering of Article 50. That’s a bit of a nonsense really; negotiations with other nations are undoubtedly already underway behind closed doors; and some of the preparatory work will have begun with the EU on a member by member basis, so this formal start to the negotiation must be symbolic more than anything else.
Friday is a quiet one for news reporters. From the US, we get industrial production and capacity utilisation data. A slight improvement is expected on both fronts. The USD doesn’t really need any more reasons to strengthen, though. The US Dollar is the default currency to own in times of international turmoil and the Brexit plans, the EU’s internal problems and tensions between the US and China are reasons enough to see strength in the Greenback.
And there is some suggestion that attendees at this weekend’s meeting of the G20 will be urged by U.S. Treasury Secretary Steve Mnuchin to help their currencies to strengthen. No one wants that for themselves if they are trying to export their way back to growth, but they are being incited not to use a weakened currency for competitive advantage. Good luck with that, Steve.
Aside from all of this, I am surprised GCHQ bothered to respond to claims that they bugged Trump Tower as a favour to President Obama during the US elections. No evidence has been brought forward to support these claims, but it does seem the Trump administration is systematically trying to alienate all of America’s allies. Perhaps it is a tactic to tell us all off and then let us back into the camp one by one. Divide and rule maybe.
President Trump is out and about in Washington a week before the Presidential election when he spots a small boy with a box.
“Hey there. What’s in the box?” he asks.
“One week old kittens,” says the boy
“Wow. What kind of kittens are they?”
“They’re Republican kittens, Mr President.”
Trump ruffles the kid’s hair and smiles as he moves on.
Two weeks after the election he sees the small boy on the street corner and stops again. Trump is with his Vice President and he calls Mike Pence over to see.
“Hey there. Good to see you again. Tell Mr Pence what you have in the box,” says Trump.
“They’re kittens,” says the boy.
With a knowing smile, Trump says, “and tell the Vice President what kind of kittens they are.”
“They’re Democrats,” says the boy.
The smile disappears from Trump’s face and he says, “Wait a minute. You said they were Republicans three weeks ago.”
“Yes Mr President,” says the boy, “but now their eyes are open.”