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November 2017

UK data has potential to shift the Pound

Published: Friday 10 November 2017

  • Sterling awaits slew of data
  • Aussie interest rates on hold for extended period
By David Johnson
 

UK data has potential to shift the Pound
 
UK Politics, EU Brexit rhetoric and US/Chinese relations dominated the news yesterday. UK Prime Minister Theresa May was forced into an unwelcome cabinet reshuffle and that was seized upon by the press. Sterling didn’t react to that but, after a slowdown in house price growth and in a data void, the Pound slipped a little. Today brings the UK manufacturing and industrial data, which could well be positive. We also get Britain’s trade balance and the first estimate from the National Institute of Economic and Social Research (NIESR) of UK Gross Domestic Product (GDP) in Q3. All have the potential to shift the Pound, so be on your toes if you have short to medium term requirements. Or use an automated order to do the ‘on the toes’ thing for you while you put your feet up.
 
The US-China question
 
The US-China thing is a curious one. The US President seems keen not to question China over human rights, or North Korea, or anything else in public, but he wants to be seen to be doing deals. You might call him one dimensional; I couldn’t possibly comment. Meanwhile, members of the Federal Reserve’s rate setting committee seem keen to talk up the chances of interest rate hikes in the US during 2018. Up to three new 25 basis point hikes are being mooted. The USD is largely unmoved by the speculation. The US marks Veteran’s Day today with a national holiday, so trading will be thin later in the day from a UK perspective.
 
Australian Dollar slightly weaker on interest rate freeze
 
Overnight, we got the Reserve Bank of Australia’s (RBA) statement on monetary policy and they seem pretty happy not to be raising interest rates for the time being. The Aussie Dollar is a tad weaker this morning, but that may well have been the desired outcome from the RBA’s perspective.
 
What next for the Brexit negotiations?
 
Not a day goes by without yet another EU leader telling the UK it has to be more flexible on negotiations, that Brexit can and should be reversed and that it is going to cost the UK a lot more than it will cost the EU. If they were all so assured of their positions, would they really be so disparaging of and smug about their second largest contributor, who has the temerity to have an opinion? Methinks they doth protest too much. Meanwhile, the UK Government is seeking to set in stone the last day of EU membership as 29th March 2019.
 
Next week is awash with consumer inflation and retail data, so the matter of interest rates will be mentioned repeatedly. 
 
Never forget…
 
Before that, we have Remembrance Sunday and services around the world to mark the end of the First World War and the loss of servicemen and women across the last 103 years. Next year will mark the 100th anniversary of that day in 1918, when the armistice was signed in Marshal Foch’s train carriage in the Forest of Compi├Ęgne. It is a sobering thought that when the guns fell silent on 11/11/18, one British Soldier remembered that, “the Germans came from their trenches, bowed to us and then went away. That was it. There was nothing with which we could celebrate, except biscuits.”
 
In the trenches – (A Joke told by my dad many, many times) 

A group of British soldiers in the trenches are running out of ammunition and food. They draw straws to see who will go back from the front to get some supplies. No one really wants to get the short straw because it is so dangerous above the trench walls. As it turns out, George, who is the fastest runner in the unit, draws the short straw and, with shouts of encouragement, he dives over the top and starts running back away from the German guns. He is zig zagging and runs like the wind, eventually he drops down over a wall and lands on someone. He jumps up and says, “sorry mate. Didn’t know you were there.”
The chap he fell on says, “What’s your name?”
George steps forward and offers his hand to shake but the other chap stands full height and says, “Stand to attention. Don’t you know the correct way to address a Major?”
George snaps to attention and salutes, saying, “Crikey Sir, A Major eh! I didn’t realise I was so far back from the fighting.”

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