Sterling Wobbles

Sterling Wobbles

Sterling had a great day on Wednesday last week when the Chancellor’s Autumn Statement did nothing to harm to pound. It breezed through Thanksgiving and but came a bit of a cropper on Black Friday. Whilst’s there was little data to support Sterling’s gains during the middle of the week, there was very little to explain its losses either.

The only UK data on Thursday was the narrow BBA mortgage approvals figure, which rose for a second successive month to just shy of 40,000. Friday’s UK data all matched or exceeded forecast; the second stab at 3rd quarter GDP left growth unchanged at 0.5% with business investment rising by 0.9% which was above forecast yet Sterling lost ground. Thursday cost the pound an average of 0.1% and by 0.2% on Friday.

The US Dollar’s progress over the last couple of days bears a striking resemblance to that of oil prices. On Thursday and Friday, when it looked as though OPEC would reach a deal on limiting output, both were steady. This morning, both moved lower. Since Friday morning the US Dollar has lost half a cent against Sterling and the Euro. The bulk of that move took place in the Far East this morning after oil opened half a cent below Friday’s close, -4% below Friday morning’s level. The trigger for all that was the news that Saudi Arabia had cancelled a meeting with non-OPEC oil producers because OPEC itself remained unable to find a compromise.

As the end of the month approaches the data calendar has a typically empty look. There are no UK statistics today and none of any real consequence from the US although the ECB this afternoon and the BoC tonight could liven things up. European Central Bank president Mario Draghi will make his quarterly appearance in front of the Committee on Economic and Monetary Affairs (ECON) of the European Parliament. Bank of Canada Governor Stephen Poloz will address the CD Howe Institute, an economic think-tank, following which he will hold a press conference. Both are sure to be interrogated about the outlook for the economy and monetary policy.