Winston Churchill was a man after my own heart. He said “A politician needs the ability to foretell what is going to happen tomorrow, next week, next month, and next year. And to have the ability to explain why it didn’t happen.” A good Chief Economist he may have made.

Sterling took yet another thrashing at the hands of the euro yesterday with further falls towards the parity mark. Sterling has fallen by 23% against a basket of currencies in recent months; the most since Britain left the Gold Standard as a result of World War II. The main driver yesterday of sterling’s decline was a release stating the amount of money the UK government borrowed in the month of November soared to £16bn, the most since records began, and made clear the terrible state that the public coffers are in.

The euro was able to overcome a poor IFO business climate reading to extend its gains; sentiment in the German economy has fallen to the lowest level since 1982. Although the euro was stronger this data did hurt global stock markets and caused the dollar to strengthen against sterling as risk aversion increased.

The Japanese are the latest central bank to play interest rate limbo as they cut rates from 0.3% to 0.1% last night. In a move that echoes the Fed’s decision earlier this week the BoJ will buy commercial paper, corporate debt, to underpin the corporate sector. Japan is already in a recession and this looks likely to continue with the bank cutting its growth forecast to 0% for 2009.

Today’s data calendar is fairly light but, as we all know, that in no way means that it will be a calm day.

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