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October 2016

Sterling tanks on Brexit timetable

Published: Tuesday 04 October 2016

  • Sterling tanks on Brexit timetable
  • Aussie base rate on hold
As has been widely reported, the Pound fell to fresh lows yesterday as markets absorbed the news that Brexit really does mean Brexit. So by March 2017, we will have begun the exit negotiations in earnest. The Chancellor of the Exchequer was also in the news; dumping George Osborne’s unrealistic target for a budget surplus by 2020 and offering a more pragmatic approach. That will involve borrowing and infrastructure expenditure but it still didn’t shore up the Pound. This morning’s UK Purchasing Managers' Index has produced mixed forecasts, so there is scope for volatility at 09:30 BST.
 
Overnight news brought the widely forecast ‘on hold’ decision from the Reserve Bank of Australia. It was the new Governor, Philip Lowe’s first meeting in charge and he acquitted himself well. He used the central bankers’ favourite word, ‘moderate’ and that always makes people happy. He also pointed to the way other industries were taking up the slack left by the drop in mining activity.
 
There are a couple of Federal Reserve speakers today but little data to get excited about. So I will keep this short and sweet today. I will leave you with news that a pigeon has been arrested in India. It was found near the border of Pakistan carrying a message that threatened the Prime Minister of India. I can’t help thinking an email would have been more effective but police are interviewing him and he may have to do some bird.
 

Modern Life

 
I was visiting my niece last week and I asked if I could borrow a newspaper.
She looked at me with pity in her eyes before tutting and saying, “Oh do catch up. This is the 21st century. No one uses newspapers these days. Modern people use these for everything.” And with that she handed me her iPad.
Well I can tell you this. That fly never knew what hit him.

 

Today's Major Economic Releases 

 
Market BST Data/Event Previous Expected
GBP 09:30 UK: Construction PMI 49.2 49.1
EUR 10:00 EU: PPI m/m 0.1% 0.0%
NZD 23:00 New Zealand: GDP price index 1.7% 1.7%
AUD 23:30 Australia: AIG services index 45.0 45.0

Daily Currency Analysis by David Johnson

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