British Pound Still Unloved

The pound continues to look vulnerable with UK consumer confidence hinting at why there is a lack of buying interest in GBP.

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By the time those interviews take place sterling may well have dropped another cent and a quarter against the euro and lost a further three quarters of a US cent.

Or at least, that will be the case if it continues on the path it has taken over the first quarter of the year.

Since the beginning of January the pound has fallen by an average of -7% against the other dozen most actively-traded currencies. Its smallest loss is of 3% to the US dollar and its biggest is a -10% slump against the Japanese yen.

Sterling was at it again yesterday with an average -0.7% decline and registering losses of half a euro cent and quarter of a US cent.

The pound's fall was catalysed by news that Tata wants to sell its UK steel factories, with the possible loss of 40k jobs.

The drop did not come in one fell swoop though; it took place in fits and starts through the day.

Confidence

This morning in the Far East sterling took another step backwards when Gfk's index of UK consumer confidence came in at zero again.

Only 14 times in the last eight years has the index been above zero. Euroland consumer confidence was numerically much lower at -9.7 but the figure did not trouble investors.

The European Commission's consumer confidence indicator is measured on a pessimistically negative scale. Yesterday's -9.7 reading was among the highest in the post-financial-crisis period.

Over those eight years it has never been above -3.7. Not that anyone pays much attention to the pan-€Z confidence measures anyway: they are more interested in the German data.

They also take notice of the ADP employment change number, which showed the US economy adding 200k jobs in March. The number was better than expected but did not do much for the US dollar, which everyone now suspects is on the cusp of beginning to hand back some of the gains it made in its long bull run.

Ecostat onslaught

Today and tomorrow will bring a host of data, much of it from Europe and the States. To pick a couple of highlights, watch out for today's Euroland inflation and finalised UK fourth quarter GDP and tomorrow's evergreen favourite, the monthly change in US nonfarm payrolls.

Analysts expect UK gross domestic product to be confirmed as having grown by 0.5% in Q4. This will be of considerably less interest to investors than the looming Brexit referendum and the job losses at Tata.

Tomorrow's US employment report should show an additional 205k people on nonfarm payrolls. The market's current antipathy toward the dollar suggests that a bigger number would be needed to send it higher.