John from Moneycorp

Australian dollar is stronger today - following the release of the RBA's minutes which underlined positives in the economic outlook in Australia.

The pound is weaker today. In Australia, there was the release of the Westpac Consumer sentiment, which rose from -1.8% to 0.4%. This has helped the Aussie dollar against the pound.

Brexit press conference due at 5pm This week is set to be another Intriguing chapter with official Brexit negotiations starting today. In the absence of a U-turn the UK position of wanting free trade and border controls without being part of the customs union is unlikely to meet a welcoming committee and as such Sterling may remain range-bound for now. Sterling remains vulnerable to domestic political instability – with the weekend press focusing on the existential threat already to this government.

Weekly currency update is below. The Aussie was the second best performer among the major currencies, behind the Canadian dollar. Against sterling it strengthened by one cent and it added half a US cent. It got two statistical legs up, the first coming when weak retail sales and slowing inflation in the States cast doubt on the upward course of US interest rates. The second was home-grown, in the form of unexpectedly strong jobs data that showed employment increasing by 42k in May. Sterling was fortunate not to extend the losses it suffered in the immediate aftermath of the general election. UK industrial and manufacturing were disappointing, as were retail sales. Inflation accelerated to 2.9% (CPI) and 3.7% (RPI), outpacing the 2.1% increase in wages and putting a further squeeze on household spending power. The pound was saved by the three members of the Monetary Policy Committee who unexpectedly voted for higher interest rates. No actual increase is imminent but there won't be any further cuts.

Not much news coming out of Australia – bit more surrounding the UK. UK inflation Consumer and retail price index data put UK inflation higher than the Bank of England's 2%target and they were ahead of analysts' projections. CPI was up by 2.9% on the year and RPI rose by 3.7%. The data helped the pound towards its first winning day since Thursday. Sterling was already on its way up when the inflation figures came out and they might have given it a little more impetus. However, investors are under no illusion that the Bank of England will take any policy action, given the uncertainty that lies ahead for the UK economy. As shown by the price action on Friday and Monday, the pound is deep inside don't-know territory. On Monday and Tuesday there was no shortage of economic pundits telling the financial media that the pound has been oversold; driven below levels that can be justified by economic fundamentals. That is not to suppose that it must therefore rebound in the immediate future: Trends like this have a tendency to overshoot. Spending power Whether CPI or RPI represents the best barometer of consumer prices, both indices were higher than the last measure of average earnings, which went up by 2.4% in the year to April. That means household spending power is declining. Today's wages figure will be examined closely for signs of further erosion. The UK employment data this morning are forecast to show an extra 10k jobseekers with the rate of unemployment steady at 4.6%. Average earnings growth is also supposed to be steady, at 2.4%. A lower number would be unhelpful to sterling

There were two overnight lurches for the Australian dollar. The first was downwards, after the current account deficit for the first quarter came in at $3.1bn instead of flat. The second one, upwards, was the result of the Reserve Bank of Australia's decision to leave its Cash Rate unchanged at 1.5%. They cancelled each other out.

A look back at the end of last week. Sterling lost an average of -0.4%, partly because of disappointing data for first quarter growth, partly because of opinion polls ahead of next week's general election and partly just because it is out of favour among investors. Its biggest loss was of -1.1% to the Japanese yen. Thursday's revised figures for gross domestic product in Q1 put quarterly growth at 0.2% rather the 0.3% expansion previously announced. The change came as a surprise and therefore as a disappointment, especially as the downgrade related mainly to consumer spending. Another concern to investors was the narrowing advantage, reported by opinion pollsters, of the Conservatives over the Labour party. It has fallen from 22 points to 5 in just two weeks. Other figures already released show Australian building permits increasing by a monthly 4.4%. Overall, the pound is weaker against the Australian dollar.

Not great news for the pound. UK economy slowed down more than expected in first quarter - part of the reason has been higher inflation impacting consumer spending.

Poor retail sales figures in Australia have weakened the Australian dollar.

Pound still strong so far this weekend against the Aussie dollar.

Will depend on economic and political events, lot of things going on which may impact the exchange rate.

This news in particular was good for the pound. Pound is currently at strong levels against the Australian dollar - in comparable terms this year (based on what the rate has been in 2017) then now is a good time to be sending money over.

UK Govt. borrowing has dropped to its lowest level since the eve of the 2008 financial crisis.

UK Retail Sales There has been a surge in the value of sterling against the EURO following the announcement of better than expected UK retail sales in February, which rose 1.4% against a forecast 0.4%. This is a much more positive outcome than the 0.5% decline at the start of the year and signals consumer confidence is increasing despite higher levels of inflation. These new results have pushed the annual rate of retail growth to 3.7% from 1% in January and caused sterling to rebound as analysts have been predicting.

May (names the) day There was confirmation on Monday that there is no situation in which sterling might find itself that cannot be made worse by the mention of Brexit. Once again it was the prime minister who tossed the grenade when she named 29 March as the day Article 50 will be activated. Investors learned two months ago that Article 50 would be triggered "by the end of March" and 29 March fits very neatly into that calendar slot. So Ms May's pronouncement hardly came as a surprise but investors nevertheless felt obliged to react by marking down the pound.

UK Prime Minister Theresa May will trigger Article 50 on Wednesday 29 March - starting the process of the UK leaving the EU.

Yesterday, Nicola Sturgeon (First Minister of Scotland) announced plans to trigger second independence referendum on Scotland's membership of the United Kingdom. There was an expectation this could weaken the pound but we’ve only seen minor moves so far.

Yesterday, the UK Parliament took the expected step further towards activating Article 50 when the House of Commons signed off the Brexit bill to the upper house. Not much is happening at the moment, data wise, to move the exchange rate considerably - the UK production and trade figures come out tomorrow.

The British prime minister's visits to the United States and Turkey and the US president's Muslim travel ban have made surprisingly little difference to exchange rates. Compared with Friday morning the pound is just about unchanged against the dollar, the lira and the other dozen most actively-traded currencies. GDP Provisional figures on Thursday for fourth quarter growth indicated a 0.6% expansion of Britain's gross domestic product in the fourth quarter of 2016. The UK number was a tick higher than expected.

Pugnacious pound Despite a disappointing set of UK retail sales figures the pound is a touch higher, on average, than Friday's opening levels. Not even the merest glint of light was to be found among the retail sales data for December. Sales were down by -1.9% on the month and November's feeble increase was downwardly revised to -0.1%. Analysts are at a loss to explain the fall, other than to speculate that consumers had brought forward their Christmas purchases to Black Friday in November. Back to Brexit The focus of investors will turn this week from Trumpton to Westminster. Tomorrow at 0930am (UK time) the Supreme Court will deliver its judgment as to whether or not parliament must approve the activation of Article 50, the process of leaving the EU. On Friday the prime minister visits the new US president. The word on the street is that the Supreme Court will rule in favour of the plaintiffs and that there will have to be a vote on Article 50. Recent experience suggests that would be positive for the pound, in that it would increase the (exceedingly slim) chance of Britain remaining within the EU.

Weekly update below – have a good weekend all. Although sterling was the undisputed leader of the major currency pack the antipodean dollars were not far behind. The Australian dollar took third place, losing four fifths of a cent to sterling and strengthening by four fifths of a US cent. E Economic data from Australia were vaguely supportive but not overwhelmingly so. Mortgage lending was respectable, consumer confidence inched higher and unemployment ticked up to 5.8% in December despite the addition of 13.5k jobs. The UK ecostats for inflation and employment were decent enough but it was the Prime Minister's Brexit speech that took sterling ahead. Its main points had been leaked the previous evening so investors were not shocked to hear that there would be a clean break - otherwise known as a hard Brexit. They were actively pleased to learn that there would be a transitional period and that parliament will have a vote on whatever deal is agreed with the EU.

After Tuesday's strong performance it would not have been a surprise to see sterling giving back some of its gains yesterday. It didn't happen. The pound was, on average, unchanged on the day after the UK employment data left it unmoved. There was nothing at all wrong with the jobs numbers. Unemployment was steady at 4.8%, its lowest level since the global financial crisis. Jobseeker claims were down by -10k, having been expected to increase. Average earnings were up by an annual 2.8%, beating the 2.5% rise in the retail price index and the CPI's 1.6%. Investors were not overjoyed by the figures: the pound showed no reaction whatsoever. But the data were good enough to ensure that sterling held onto the advantage it had gleaned on Tuesday.

Sterling choppy despite FTSE gains The FTSE 100 has started 2017 at rapid pace and set a new intraday record high yesterday as the UK services sector saw its fastest growth since 2015 and exceeded expectations. Coupled with strong domestic sales witnessed by manufacturing firms, forecasts for Q4 GDP are that it could come in close to 0.5 percent, similar to the previous quarters in 2016, maintaining the resilience of the post referendum economy in the UK. It remains to be seen how manufacturing firms cope with pricing into 2017 as margins continue to be squeezed by the rising cost of materials. In addition UK retailer Next prompted UK retail sector shares to slump as they slashed profit forecasts for the current financial year.

The financial new year got off to an upbeat start on Tuesday with share prices mostly higher and economic data around the world painting a generally positive picture. Currency movements were modest: the US and Australian dollars vied for the lead and Sterling was on average unchanged. Brexit shuffle Investors were unsettled by the resignation of Ivan Rogers, Britain's senior representative to the EU. Both he and his deputy will be leaving shortly before the government invokes the Article 50 process of leaving the EU. The inference is that his replacement will be more inclined to negotiate a "hard" Brexit. Rightly or wrongly the market consensus is that a "hard" Brexit, a complete break with Europe including departure from the single market, would be more hurtful to the UK economy than a "soft" Brexit, which would leave the country in roughly the same situation as Switzerland and Norway. The harder it promises to be, the harder investors are on the Pound.

So as another year comes to a close, we reflect on what has been a tough period for the pound. This year got off to a fairly turbulent start, with worries about China’s economy escalating again and fresh volatility in financial markets triggering concerns about a deepening crisis - bigger shocks were to come though. The Pound weakened considerably in 2016 – it was the worst performing major currency. Why? Well, in short Brexit happened – in the build up to the EU Referendum vote the pound weakened - and also post Brexit the reaction has been negative for the pound due to the mass uncertainty which is currently present. The shock and lack of planning for a leave victory has left many stunned, even to this day. The referendum was widely expected by the markets to be won by the ‘remain’ camp – as we know, a surprise leave vote created a major upset in Britain’s political establishment Looking ahead to next year, Brexit will obviously be a big focus again – perhaps if we can get more clarity on the future plans for the UK then things may settle down for the pound. There are so many variables involved here though so this may prove unrealistic. Contrary to what some predicted prior to the Brexit vote, UK economic data released in recent months has shown the British economy so far proving resilient to the Brexit shock. The Australian dollar In 2017, the Australian dollar will be shaped by events in the US plus importantly the performance of the economy in Australia. The Australian economy surprised everyone in the third quarter of 2016 by shrinking 0.5% rather than rising by a similar amount as had been generally expected – was this just a blip or is slower economic growth to come in Australia? Of course, the performance on the economy in China, as always, will have an impact on Australia (Australia relies heavily on its exports of iron ore and natural gas to China). Additionally, there is speculation Australia may cut interest rates in 2017. If the Reserve Bank of Australia (RBA) decides to cut rates then this could weaken the Aussie dollar. Summary The Pound to Australian Dollar exchange rate changed considerably in 2016. The highest level reached was in January 2016 – 2.094 – and the lowest level being 1.573 in October. However, in recent weeks, GBP has been slightly stronger versus the Australian dollar. One thing is for sure, these are particularly uncertain times and currencies are more volatile than ever. Worth noting that financial markets appear to be ending the year on a positive note even as further economic and political risks lie ahead in 2017. I would like to wish everyone a Happy New Year and all the best for 2017. Best wishes John from moneycorp