Pound’s advance continuing

Sterling continues to strengthen against both the dollar and the euro to trade at $1.42 and just under 85.75p respectively this morning, while the single currency is largely unchanged against the dollar at around $1.2150. The pound has traded for the most part in a range of about 83p to 94p against the euro since the Brexit referendum in June 2016, so its recent gains have taken it very much to the higher end of that range

Equity markets in both Europe and the US closed essentially flat yesterday, while core bond yields unchanged to marginally lower at -0.34% and 1.34% in the case of German and US 10-year yields respectively

The annual rate of CPI inflation in the Euro Area in January was confirmed at 0.9% according to the final reading published yesterday, up from -0.3% in December, while the core (or underlying) rate came in at 1.4% (up from 0.2%)

The Chair of the Fed, Jerome Powell, says the path of the US economy “continues to depend significantly on the course of the virus and the measures undertaken to control its spread”. He notes that “following a sharp rebound in economic activity last summer, momentum slowed substantially, with the weakness concentrated in the sectors most adversely affected by the resurgence of the virus”, but that the “on-going vaccinations offer hope for a return to more normal conditions later this year”

Consumer confidence in the US edged up for a second consecutive month in December according to the Conference Board’s measure, though it still remains well below its most recent high back in November last year

It is quiet enough on the data front today with new home sales in the US the main release of note