020 7898 0500Another day of sterling volatility on what began as a positive day for the pound. It climbed higher against the dollar and hit a psychological barrier before falling back once more. Then, after lunch, it climbed back up again. The City seemed rattled by the government’s announcement that it won’t be part of the eurozone’s customs union after Brexit, but poor balance of trade figures from the US helped the pound claw back its losses once more.
The reasons for the government’s position on the customs union seem strange and could be a thinly veiled attempt by Theresa May to curry favour with the hard-Brexiteers in the Tory party. Her position looks increasingly under threat which won’t do the pound any favours.
Today’s only real release of note is the Halifax house price index for January. Tomorrow is the big day, when the Bank of England will convene to vote whether or not to increase interest rates (likely kept on hold), but it will be interesting to see what they say regarding future monetary policy.
