The British Pound finished on Monday as the top performer of the day, just edging the Australian Dollar into second place on our one-day table. GBP/USD was initially sold down to a low just above USD 1.3840, but was then boosted by talk of an agreement on a post-Brexit transition deal and GBP/USD hit 1.39 at the end of the London afternoon. Overnight in Asia and this morning in Europe, it has slipped back a little and though trading ranges remain tight, the pound is actually lower against all the major currencies we follow closely here.
As markets await the more serious business of the Chancellor’s Spring Statement (see below) we can’t resist a Press Release from the UK Office for National Statistics which today reports changes in the basket of goods which comprise the CPI index. The statisticians note that, “Every year we add new items to the basket to ensure that it reflects modern spending habits. We also update the weight each item has to ensure the overall inflation numbers reflect shoppers’ experiences of inflation. However, while we add and remove a number of items each year, the overall change is actually quite small. This year we changed 36 items out of a total basket of 714.” Women’s exercise leggings and action cameras such as GoPros have been added to the basket of goods and services used to calculate inflation. In addition, new food items added to the 2018 list include raspberries, quiche and prepared mashed potato. The rise of the smartphone means digital camcorders no longer feature in the basket, while digital media players such as Chromecast and Apple TV have replaced digital TV recorders and receivers such as Freeview boxes. Other items added to the 2018 basket include body moisturising lotion, girls’ leggings and high chairs. Items removed include peaches and nectarines, leg waxing and ATM charges.
Thoughts now turn to Tuesday’s Spring Statement from the Chancellor of the Exchequer. There is the chance of a rare upgrade to UK economic forecasts after the incoming data over the past few months have shown the Office for Budget Responsibility was too pessimistic in its assumptions on UK productivity. There are no longer any changes to taxes announced in March as the UK tax year begins on April 6th and the Chancellor has said he prefers to make these announcements in the Autumn to give time for consultation on detailed implementation. The OBR’s numbers, then, will likely take centre-stage in this new set-piece event which, according the BBC will comprise just a brief 15-minute statement to MP’s at 12.30GMT. The British Pound opens in North America at USD1.3895, GBP/EUR1.1265 and GBP/CAD1.7860.