There was no question of sterling's supremacy. Its smallest gain was the three quarters of a cent it took from the US dollar; its biggest was against the Norwegian krone, where it strengthened by 3.5 per cent. Norway's new prime minister Erna Solberg and central bank governor Oeystein Olsen have joined forces to make their currency weaker and analysts suspect it will head towards parity with the Swedish krona.
The euro took a pasting on Thursday when the European Central Bank moved more swiftly than expected to cut its benchmark interest rate to 0.25 per cent. With Euroland inflation falling and unemployment still on the way up investors were reminded that the ECB president has talked in the past of the theoretical possibility of negative interest rates; they wondered if that theory might become practice.
A late run by the US dollar began with stronger-than-expected growth of 0.7 per cent for the American economy in the third quarter and continued with a positive surprise on the employment front. Non-farm payrolls went up by 204,000 in October, despite the partial government shutdown, and the two previous months' figures were revised upwards. Altogether it amounted to more than twice as many new jobs as investors had bargained for.
Sterling's superior performance was the result of a rebound in UK manufacturing and industrial production and some unexpectedly impressive purchasing managers' index readings. The one for the services sector was the strongest since May 1999.
Buoyant economic data is leading investors to think the Bank of England will have to begin tightening policy sooner than it expects. The latest view is that sterling interest rates could find themselves leading the way higher among the major currencies. That expectation could either be reinforced or dashed by this week's data for UK inflation, unemployment and retail sales.
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