Last week ended on an average note for the euro, it was unchanged against the other dozen most actively-traded currencies. Over the last month the strongest performer had been sterling and by a good margin. Investors had taken a shine to the British pound, in the last week sterling gained an average 3.4% against the other dozen most actively-traded currencies.
Then came the reality check. After a month of initially slow, then rapid upward progress the pound came to a halt on Monday as investors paused for yet another reassessment of what President Trump will mean for the global economy. Sterling was the weakest performer among the major currencies, though only by a whisker.
Through to midweek and the pound trod water, rather more successfully than it had on Monday when its head was mostly below water. It was just about unchanged against the euro and the US, Australian and New Zealand dollars. UK inflation data showed consumer price index inflation slowing to 0.9%, it had been expected to rise to 1.1%. The lack of reaction was attributable to the Bank of England's pledge to decouple interest rates from inflation for the time being. Nor did the pound react to Governor Mark Carney's comments to the Treasury Committee. He stuck to his policy guns, saying that to blame the bank for economic equality is a "massive blame-deflection exercise".
Since the US election last Tuesday the dollar is the only major currency to have kept pace with sterling. In the last seven days it was the strongest performer, picking up one and three quarter cents against the pound and three and a quarter cents against the euro, where it touched a 12-month high.
Barack Obama, on his farewell tour, visited Athens where he spoke of the need for Greece's creditors to relieve some of the country's debt. The following day he was in Berlin, perhaps to make the same suggestion to Angela Merkel. It was a reminder that Greece’s debt perma-crisis has not gone away: it has simply been overshadowed by the more immediate issues of Brexit and the US election.
The Euroland economic data were not of much help to the euro either. Industrial production was down in September. Gross domestic product expanded only by a provisional 0.3% in the third quarter. Inflation remained stuck at 0.5%. Investors' lack of enthusiasm for the euro allowed it to fall to a 12-month low against the US dollar with a weekly loss of three and a quarter cents. It did slightly less badly against sterling, losing two cents.
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