Researchers at Brooklyn College have discovered that women who regularly watch reality television programmes, such as Here Comes Bunny Booboo and Reluctant Housewives, are three times more likely to use tanning beds than those who prefer documentaries and cooking shows. They are also have twice as many handbags and are four times more likely to sprain an ankle by falling off their platforms.
Sterling’s handbag count might not be what it was in Mrs Thatcher’s day but it still gets a regular tanning and came to grief again yesterday falling off a very low platform. On the day it is down by two and a half US cents in foreign currency exchange, two yen, one and a half Canadian cents and half a euro cent. Its losses for the year to date range from 1% against the South African rand to 8% against the Swedish krona and its only gain is the 2% by which it has risen against the Japanese yen.
It was the Monetary Policy Committee minutes that did for sterling on Wednesday. They revealed the committee had discussed various ways of swerving monetary policy “should further stimulus be warranted”, including further asset purchases and taking the Bank Rate below its current 0.5%. If news of that discussion was not enough to get the bears going, the 6-3 vote to keep the asset purchase programme on hold certainly was. The governor and Paul Fisher, director of markets at the Bank, joined permadove David Miles to support the purchase of another £25bn of gilts.
In the light of consistent sterling bearishness on the part of the governor and a speech by MPC member Martin Weale at the weekend, in which he set out the case for a weaker pound, investors could not help but assume that the MPC sees the achievement of a more competitive currency as the only arrow left in its quiver. The addition of another £25bn to the Bank’s stock of government bonds might not, of itself, do anything to stimulate the economy. However, the discussion, anticipation and eventual reality of such a move is bound to have a depressing effect on the pound. The downward pressure can only be amplified by the MPC’s expectation that inflation will remain above its 2% target for years.
Later in the day a different set of minutes had an opposite effect on the currency concerned. The minutes of the Federal Open Market Committee’s January meeting put a new slant on investors’ expectations. They suggested growing opposition to open-ended asset purchases and sowed the seeds of doubt about the FOMC’s commitment to endless years of ultra-low interest rates. The dollar jumped half a cent on the news against both the pound and the euro, making it the day’s best-performing major currency. This will probably be good news and may push people to use services such as from Moneycorp send money abroad.
The UK employment data, which showed an uptick in the rate of unemployment from 7.7% to 7.8%, a record number of people in work and a larger-than-expected fall in the number of jobseekers, were utterly buried by the furore surrounding the MPC minutes. Neither was there any reaction to the rest of the day’s ecostats, which included higher Swiss business confidence and slightly-improved consumer confidence in Euroland.
Today brings the provisional purchasing managers’ indices from the euro zone, together with US inflation, jobless claims and existing home sales. Britain’s contributions are the CBI survey of manufacturing orders and January’s public sector net borrowing. If the latter is much above £10bn the pound will be in line for another drubbing.