The Pound was by some distance on Monday the best performer of all the major currencies we follow here. It moved back up on to a 1.38 big figure during the European morning and on to a best level in the New York afternoon of 1.3988; a fresh high for 2018 and the highest since the day after the referendum in June 2016. Overnight, it briefly broke the USD1.40 level but couldn’t hold on to all of yesterday’s gains, and has slipped back to 1.3940.
Although the IMF has raised its forecast for global growth ahead of the World Economic Forum in Davos, Switzerland, the Fund has cut its forecast for UK growth in 2019 to 1.5%, down from 1.6% previously. In response, the UK Treasury issued a short statement that, “We are building a Britain that is fit for the future by improving skills, backing innovation and investing in infrastructure to deliver a stronger economy and guarantee a better future for the next generation.”
The latest monthly CBI survey of 369 manufacturers published this morning revealed that optimism about both business conditions and export prospects improved at an above-average pace. Growth in manufacturing output and domestic and export orders all picked up, compared with the previous three-month period. Stocks also continued to grow robustly: for example, inventories of finished goods stocks rose at the fastest pace since October 2013. Employment grew at the fastest pace since July 2014 over the last three months, with further growth expected next quarter. However, skill shortages are high on firms’ agendas, with the number of firms citing skilled labour as a factor likely to limit output over the next three months the highest for more than four decades. And overall capacity pressures are biting hard: the proportion of firms with spare operating capacity was the lowest in 29 years.
On Wednesday we get the latest month unemployment and average earnings numbers and on Friday it’s the Q4 GDP numbers where consensus looks for a +0.4% q/q increase compared to the +0.5% rise which the Bank of England appears to have penciled in.
The British Pound opens in North America this morning at USD1.3940, CAD1.7380 and AUD1.7500.