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May 2016

Sterling slips after the BOE's recession warning

Published: Friday 13 May 2016


  • Sterling slips on BOE recession comments
  • USD mixed as Fed members disagree
  • Germany back in deflation territory

Sterling fell after the Governor of the Bank of England warned that, if the UK votes to exit the EU, recession could follow. It's a statement of the possible but was enough to weaken the Pound. It overshadowed the fact that the BOE left the base rate on hold but the widely expected downgrade of the bank's growth forecasts for the UK were certainly a factor in Sterling's slide.  Telling the UK public that a Brexit is a risk is like telling America that their choices in the upcoming presidential election are limited. Everybody knows it. 

However, with Germany back into deflation (-0.1% in April), virtually no growth across the EU and cracks in the solidarity regarding the refugee crisis and Turkey, there are risks to staying in the EU because there is no option for 'status quo' on the referendum paper. Things are changing and will change whether Britain is in or out.  

As well as Sterling sliding, the US Dollar was knocked a little by comments from the President of the Boston Federal Reserve. Eric Rosengren thinks the likelihood of further interest rate hikes in the US has been overplayed. Mind you, the Kansas City Fed President, Esther George thinks interest rates are too low and Cleveland Fed President Loretta Mester was encouraged by increasing inflation so, as they say in the States, go figure. This afternoon's US retail sales will add to the confusion but they are expected to deliver 1.0% growth or thereabouts, so the hawks will seize upon that. 

In Europe, there are heaps of inflation reports due today from most of the Eurozone states and we will get the economic growth data for the Eurozone as a whole. That is the final Q1 data and should show the 0.6% growth figure that was announced in the 2nd estimate a few weeks ago. So it shouldn't change the Euro too much. 

'Beware', they say. It is Friday the 13th and we all know what that means don't we. Well I didn't because I had never really thought about why this combination of day and date was supposed to be unlucky and there doesn't appear to be any real basis for it. When you research it, there are allusions to the Knights Templar being arrested on Friday 13th 1307 by Philip IV of France and a book written in 1907 called Friday the 13th reinforced the myth and there are some spurious links to there being 13 people at Christ's last supper but it is all such a lot of tenuous bunkum. So don't fear Friday 13th; embrace it. Because, if you do so, you'll be one of the few who is and it could be your lucky day instead.

Modern definitions

•    Snaccident – Starting a bag of crisps, box of chocolates and finding you've eaten the whole lot without thinking
•    Screenager -  A person in their teens or twenties who is obsessed with computers and the Internet.
•    Bawsome – Something which is awesomely boring
•    Hiberdating – When a person starts ignoring invitations from friends  because they are dating
•    Textpectation – The pause when you are waiting for a text response
•    Unkeyboardinated – Can't type without repeated spelling errors (me)
•    NonNomNym – A food that tastes like something you have eaten before
•    Cellfish – Someone who spends all of their time on their phone even when there are only the two of you present.
•    Chairdrobe – Where you throw all of your clothes when you undress
•    Floordrobe – Where your clothes are if you miss the Chairdrobe