- Sterling improves gradually
- RBA minutes might explain rates on hold
It is almost not worth commenting on the UK elections; all the parties are spewing spending pl
ans; none of which are truly credible but we all nod and smile. You could describe the policies of the three main parties as ‘In’ (LibDem) ‘Out’ (Tory) and ‘shake it all about’ (Labour). The Hokey-cokey election has started.
Sterling improves gradually
Interestingly, Sterling continues to make small daily gains as the hint of a whisper of the end of all the brexiting looks more likely. This in spite of UK construction spending slowing to a 5 year low and a drop in the number of houses available on the UK market. The uncertainty of Brexit and an election will do that to an economy. There is nothing of any import in the UK data diary today, so, barring any major election development, sideways is the most likely trading direction for Sterling.
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European Central Bank financial stability review ahead
There is no data from Europe this morning but we will get the European central Bank’s financial stability review and a speech from Luis de Guindos, the Vice-President of the European Central Bank. The report is poorly named because there is no stability in any financial market right now and the EU is as affected by the Brexit-delay-malaise as the UK is. It is also affected by the China-US trade impasse and by historically low international interest rates. Those low rates are pushing investors into equities markets; hence US share markets closing at record highs and shares in the far east still rising in spite of China and Hong Kong. Sterling is pressing €1.17 after another period of gradual strengthening.
US data this week
There is little by way of US data today. On Wednesday we will get the minutes from the Federal Reserve’s last meeting. Everyone will be wanting to ascertain whether they have officially paused their interest rate cutting cycle or not. The US Dollar remains susceptible; hence the Pound pucking above $1.29.
Sterling gains against AUD and NZD as well
Sterling has gained against the Australasian Dollars as well. A$1.90 is on the interbank screens, as is NZ$2.02 again. We will get the minutes from the last reserve Bank of Australia meeting overnight tonight. As you know, after cutting their base rate to an historic low in October, they left the base rate alone in November and that surprised the markets. We will have a better understanding of the ‘Why’ behind that decision by tomorrow.
New ECB head to hold a speech on Friday
The new head of the European central Bank, Christine Lagarde is due to make a speech on Friday. That will be worth a watch for signs of any step change in the ECB’s policy viewpoint.
Other than this, hands up anyone who can tell me exactly where they were on the 10th March 2001……anyone……Oh just you Your Grace. I think that went well then.