The pound strengthened yesterday following the unexpected resignation of the Chancellor of the Exchequer in the UK, gaining around a penny against the euro to 83p and jumping to over $1.30 against the dollar. The latter has gained some further albeit limited ground against the single currency to stand at just under $1.0850 this morning
Equity markets in Europe and the US recovered from early sharp losses although they still finished lower on the day. Core bond yields also end down on the day but they closed off their lows (with US 10-year yields trading at just over 1.60% and equivalent German yields trading at around -0.40%
The resignation of the UK Chancellor, which was a surprise, was interpreted by the market at least that the Johnson government will loosen the purse-strings by more than would otherwise have been the case, boosting growth and perhaps making a cut in interest rates by the Bank of England less likely.
The German economy stagnated in the fourth quarter of 2019, with GDP flat on the third quarter, although it did manage to eke out modest growth of 0.4% when compared to the fourth quarter of 2018
The annual rate of CPI inflation in the US rose for a fourth month in a row in January to stand at 2.5%, its highest level since October 2018
Data due today includes a second estimate of Euro Area GDP in Q4 2019 as well as employment for Q4, while in the US we get retail sales, industrial production and consumer confidence