It was a quiet day for economic data, but it was far from quiet on the currency markets, as fresh Brexit uncertainty had its wicked way with sterling. Against the dollar, there was significant sterling volatility, with more than a 2.5-cent difference between the highs and lows throughout the day. A quick calculation shows us that that move represents a 2% swing in one day.
Until we have further clarification on what sort of Brexit deal we can expect, it is reasonable to expect similar moves. Investors receive a piece of news that seems positive and pile into the pound, then we hear that the Cabinet and government and parliament cannot agree on what our negotiation position is, and the pound tumbles. It really is quite difficult to see how we are going to strike a deal until MPs from all sides can start working together to create a unified position.
Today is a big one for the UK, with average earnings and the unemployment rate for September on the schedule. Including bonus, wages are expected to have grown by 3.1% from 2.7% the previous period, but recent readings have sometimes been wide of the mark. We could be in for another interesting day.
