| Pound sterling faces eco stat free Friday |
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| Written by Mark Deans at MoneyCorp | |
| Friday, 19 March 2010 09:30 | |
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The morning's Mark Deans column: Good news for the chancellor - he is £6 billion better off than he thought - it will be quiet day for statistics. Good morning. In November last year North Korea rebased its currency, decreeing that one new won would be worth 100 old wons. That might have been a sensible move if the inflation that made the exercise necessary had been brought under control. But it hadn't, and serfs were allowed to exchange a maximum of W100,000 each - about US$40 at the time - for the new money. Within a week the new currency had fallen to the value of the old one, leaving people's life savings worth less than US$4. Needless to say, the move caused chaos and has also brought widespread starvation. In recognition of this the Dear Leader has identified the finance minister responsible, Pak Nam Gi, and fired him. Sorry, shot him. No such fate awaits Britain's finance minister, at least as long as he can run faster than his next-door neighbour. He received a lifeline yesterday when February's public sector net borrowing figure came in at £12.4 billion, £2 billion less than expected, and January's borrowing number was reduced by £4 billion. In the great scheme of things the £6 billion net reduction in perceived debt was but a flimsy lifeline, however it was more acceptable to the chancellor than the concrete lifebelts that the world usually chucks at him. The smaller than expected mortgage approvals figure went some way to offsetting the good news of the debt shrinkage but, taken together, investors decided they were not grounds for a fresh pound sterling sell-off. Neither were they a justification for fresh buying. The pound kicks off today virtually unchanged against the yen, the euro and the Canadian dollar. Against everything else it is lower, but not apparently because of its own failures. The usual risk-appetite / risk-aversion logic fell apart and the traditional strong-data-mean-strong-currency argument failed as well. In one of its more schizophrenic sessions the market bought dollars against the pound, the yen, the euro and the Loonie; at the same time it showed a preference for the Aussie and Kiwi dollars and the Swiss franc. In the absence of a quantum theory of foreign exchange it is impossible to justify the apparent contradictions other than to speculate that a) risk-appetite remains reasonably healthy and b) investors prefer the dollar and the Swissy to the euro (Greece 1 - Germany 5) and the pound (hang parliament). Given the market's immunity to yesterday's economic data it will probably not be unduly concerned at the shortage of them today. The only figures from Europe are those for German producer prices, which were unchanged in February. Canada keeps interest alive until lunchtime with consumer price inflation and retail sales. There is nothing from the States. The latest opinion polls show the Conservative party with either a 36-32 lead over the Labour party (The Sun) or a 39-26 lead (Angus Reid). As both pollsters see no change from their previous results it is difficult to decide which one to believe. It is equally hard to decide whether the pound is due for a profit-taking rally (against the dollar) or a profit-taking sell-off (against the euro). Whichever it is (and it could be both) it ought not to be too severe on an ecostat-free Friday. Have a good weekend. 
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| Last Updated ( Friday, 19 March 2010 09:32 ) |