No white smoke yet

There’s no white smoke yet regarding a Brexit deal, or as Boris Johnson has put it, we’re close to the summit but not yet at the top of the mountain. It seems the EU and the UK have agreed on the issues of customs and consent with negotiations continuing in relation to a VAT regime between Northern Ireland and Great Britain. However, the DUP has thrown the cat among the pigeons this morning, saying “as things stand” it could not support what is being suggested in terms of customs and consent but will “continue to work with the UK government to get a sensible deal”. Without the DUP on board it will be difficult to get a deal through the UK Parliament (indeed, given the parliamentary arithmetic, it will be difficult even with the DUP onside)

Sterling is being whipsawed by the Brexit headlines. Having risen to intra-day highs of just under 86p and almost $1.29 against the euro and the dollar respectively yesterday, it has not surprisingly fallen back this morning (albeit modestly so) following the DUP statement, trading at just over 86.5p and $1.2750. It’s likely to remain volatile ahead of and during today’s European Council meeting as we wait to see if a deal is finally agreed

The euro has advanced a little against the dollar and is hovering just below $1.11 at the off today, while core bond yields edged down yesterday (and ditto this morning) amid soft equity markets

The annual rate of headline inflation in the UK remained at 1.7% in September (slightly below the Bank of England’s 2% target), while the core rate picked up to 1.7% from 1.5% in August

Retail sales in the US dipped in September but August’s gain was revised higher, and for the third quarter of the year rose at a healthy pace broadly in line with the second quarter outturn

Data due today include retail sales in the UK and jobless claims, industrial production, and housing starts in the US